Crude oil prices rise on supply concerns, but dollar strength weighs
Crude oil prices rose 2% on Friday, supported by concerns about lower supplies from key producers. However, the strength of the US dollar, which reached a six-month high, weighed on the oil market.
The International Energy Agency (IEA) and the Organization of the Petroleum Exporting Countries (OPEC) both reported that global oil supply is expected to decline in the coming months. The IEA said that global oil supply will fall by 0.1 million barrels per day (bpd) in 2023, while OPEC said that supply will decline by 0.2 mbpd.
The US dollar index, which measures the value of the US dollar against a basket of six currencies, rose to 106.12 on Friday, its highest level since January. A stronger dollar makes oil more expensive for buyers using other currencies.
The CME FedWatch Tool indicated a 93% probability of the Federal Reserve keeping interest rates unchanged in September, with a 43% chance of one more rate hike in 2023. This suggests that investors are not expecting the Fed to raise interest rates aggressively in the near future, which could support oil prices.
In other commodities, gold prices fell 1.2% on Friday, while iron ore prices slipped 2%. Gold is often seen as a safe haven asset, and it tends to fall when the dollar strengthens. Iron ore prices fell as China increased regulatory oversight on price movements.
Investors will now be closely monitoring upcoming data releases, including US inflation, retail sales, trade data and industrial production figures. The European Central Bank’s interest rate decision, UK trade data, industrial production, and earnings reports, as well as China’s industrial production, retail sales, loan growth, and India’s inflation rates and industrial output, will provide investors with insights into the global economic landscape in the upcoming week.
Here are some additional details about the factors that affected the commodities markets this week:
- Crude oil: Crude oil prices rose on concerns about lower supplies from key producers. The IEA and OPEC both reported that global oil supply is expected to decline in the coming months.
- Gold: Gold prices fell as the dollar strengthened. Gold is often seen as a safe haven asset, and it tends to fall when the dollar strengthens.
- Iron ore: Iron ore prices slipped as China increased regulatory oversight on price movements.
Investors will be closely monitoring upcoming data releases in the coming week for further clues about the direction of the commodities markets.
- 14 Sep
Oil Prices Rebound as Markets Focus on Tighter Supply Outlook
Oil prices rebounded on September 14 as markets focused on tighter supply outlooks. The International Energy Agency (IEA) said that Saudi Arabia and Russia's extension of oil output cuts to the end of 2023 will mean a substantial market deficit through the fourth quarter. Gold prices also edged higher as investors anticipated a pause in interest rate hike at the US Federal Reserve's policy outcome on September 20.
- 14 Sep
Red Chilli Prices to Rise on Festival Demand, Weak Rains
The prices of red chilli, India's most exported single spice, are expected to rise again due to higher festive demand and weak rains in the coming weeks. The prices have fallen from ₹250 per kg to around ₹230 per kg in recent weeks due to subdued export demand and accumulation of sufficient inventory. However, the prices are expected to rise again in the coming weeks due to the Dussehra festival season and the late setting in of the southwest monsoon.
- 11 Sep
Global Financial Markets Under Pressure
Global financial markets came under pressure last week as investors turned their attention to a number of key issues, including China's real estate troubles, the potential for more Fed rate hikes, and differing opinions on Europe's rate outlook. The US dollar index surged to a six-month high, while US treasury yields rose. Global equity markets fell, and oil prices rose. The upcoming week will bring a focus on US inflation figures, retail sales data, the ECB monetary policy meeting and a range of Chinese economic data releases. Investors should monitor these factors and adjust their investment strategies accordingly.