Below is a summary of last month’s commentaries from BlackSummit’s sister company, Fundamental Analytics. The following describes the highlights of those commentaries, which showcase the factors affecting the energy, agricultural, and other commodities that power and feed the world.

Crude Oil on the Rise

The crude oil market saw a few significant developments last month, pushing prices above $80 per barrel for West Texas Intermediate (WTI). (As of writing, WTI sits around $87, while Brent is close to $91). Supply concerns were high due to ongoing tensions in the Middle East and OPEC+ extending production cuts. On the other hand, demand remained strong, likely thanks to a growing US economy and the green energy transition not yet significantly impacting consumption. China’s economic slowdown, however, will probably be a major factor for future prices.

WTI hiked despite consecutive inventory buildup.

Analysts at the EIA predicted a bullish market in 2024 due to these supply uncertainties and voluntary OPEC+ cuts, which were formally extended in March. OPEC+ is optimistic about continued strong demand in the coming years, fueled by anticipated global growth and economic rebounds in China and India. This view directly contradicts the International Energy Agency (IEA), which sees ‘peak oil’ demand arriving in 2030 followed by a decline due to the anticipated growth of alternative energy sources. OPEC argues that advancements in exploration and technology will keep demand steady, rejecting the idea of peak oil altogether.

Wheat: Short-term Developments and a Long-term Outlook

The wheat market exhibited conflicting signs last month. Wheat futures prices initially plunged to a 3.5-year low due to abundant global stockpiles. However, concerns about disruptions to Ukrainian exports caused by the ongoing war with Russia led to a modest price uptick. Despite this, analysts predict a bearish market soon.

Speculators continue to increase their total short positions. 

In the long term, China’s efforts to achieve food security through genetically modified, high-yield wheat could significantly impact the market. If successful, this could lead to China relying less on imports, potentially driving down global wheat prices significantly.

More Energy Commentaries from Fundamental Analytics:

More Agricultural Commentaries from Fundamental Analytics:

Other Commodities Commentaries from Fundamental Analytics:

print