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Commodities have opened the fourth quarter in some style, with prices set for the best weekly showing since March after OPEC+ agreed to chop oil supply.
The coming week brings a host of signals on the outlook over the rest of the year and into 2023 before earnings season hits full flood.
In energy, highlights include outlooks from the International Energy Agency and Organisation of Petroleum Exporting Countries as investors gauge prospects for demand, Europe’s energy crisis, and the impact of sanctions on Russia flows. In crop markets, the US Department of Agriculture lifts the veil on its vital WASDE snapshot.
In addition, minutes from the Federal Reserve’s September rate-setting meeting, due Wednesday, and US inflation data on Thursday, will shape the debate on interest rates, which may swing gold prices.
Here are some of the main items for investors to track next week, with attention also falling on struggles along the Mississippi River as water levels dwindle; China’s return to the fray after a week-long break; and key data from Asia on the world’s most-consumed cooking oil. Rounding it off is some seriously expensive gasoline, with California prices on the cusp of a record.
The oil market is currently so stacked with uncertainty that even Saudi Arabia’s energy minister said this week that he’s never known a situation like it, weighing in after presiding over an OPEC+ supply cut drove a surge in prices. As such, traders will be looking to influential monthly reports next week from the International Energy Agency and the Organization of Petroleum Exporting Countries for much-needed clues about the shape of things to come. – Bloomberg
The IEA’s analysis comes on Thursday, one day after the cartel issues its take.The biggest worry on the demand side is the outlook for global growth as central banks tighten policy, hurting energy consumption. On the supply side, the market will be looking for any numbers on how big the hit to Russian supply could be when EU sanctions on flows come into force in December. After the OPEC+ salvo, Goldman Sachs Group Inc. and Morgan Stanley both painted bullish outlooks into year-end suggesting prices may regain US$100 a barrel.
As concerns swirl over farm exports getting out of Ukraine and a global recession crimping grain demand, the US Department of Agriculture releases its latest crop estimates Wednesday. The agency stunned markets at the end of September with reports showing smaller-than-expected US wheat and corn supplies, together with bigger-than-forecast soybean stockpiles.
Those findings will be folded into the October report known as WASDE. While drought has squeezed US corn output, it’s still not clear by exactly how much. The dryness depleting Mississippi River water levels is driving up barge freight rates, making American corn extra expensive. The costly crop and limited supply could prompt USDA to trim US export projections. Analysts, on average, expect USDA to cut its estimate for US corn yields. Any reduction in yields or crop sizes will cause volatility as stockpiles are still tight.
Mississippi blues
In a crisis reminiscent of the problems that struck Europe’s mighty Rhine River earlier this year, waterborne trade along the Mississippi River is suffering as drought cuts flows. The vital US waterway ferries key commodities between the heart of America and the Gulf Coast, and water levels are already so low in some spots that barges are getting stuck, causing vessel traffic to get backed up. With little relief in sight, the situation may worsen over the coming week. Bloomberg
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