Top 5 Crucial Charts to Watch in Global Commodity Markets This Week
OPEC+ has decided to postpone the restoration of oil supply until April, leading options traders to express their most pessimistic outlook in months. Attention is focused on soybeans as the US Department of Agriculture releases its current supply-and-demand forecasts this Tuesday. Simultaneously, the US natural gas “widowmaker” strategy has reversed, indicating initial predictions of an oversupply by the end of the winter season.
Below are five important charts to reflect on in the global commodity markets as the week begins.
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Oil
Options traders are displaying a significant bearish sentiment on Brent crude as OPEC+ countries have again opted to delay resuming oil production halted since 2022. This delay seems poised to only mitigate price drops during the traditionally low-demand first quarter. With futures fluctuating within a $10-$15 trading bandwidth and holidays approaching, implied volatility for options is also declining as traders refrain from wagering on significant price shifts.
Soybeans
Grain traders are eagerly anticipating insights into South American soybean supplies from the USDA’s latest WASDE report. Extensive rainfall in Brazil’s key farming areas has raised expectations for a record harvest next year from this leading supplier, complementing a strong US crop. This promising forecast has begun to exert downward pressure on prices for the oilseed, which is used in various applications from poultry feed to biodiesel.
Alumina
Aluminum producers in China are cutting back on output due to a rise in prices of alumina, the key ingredient for producing this lightweight metal, which is increasing costs for the world’s largest aluminum producer. The price of alumina has more than doubled this year, despite a recent decline from record highs, spurred by disruptions in supply chains from Jamaica to Guinea and Australia to China. Meanwhile, the price trajectory of aluminum has experienced more modest increases, with futures rising about 9% this year on the London Metal Exchange.
Natural gas
The widowmaker trade has turned negative. The difference between March and April natural gas futures shifted last week, indicating the earliest seasonal shift observed in the past nine years. This volatile trade, known as the widowmaker due to its unpredictability, essentially bets on how tight supplies will be as North American winter concludes.
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Solar
The US solar sector is approaching a period of reduced activity, with installations expected to stabilize through the end of the decade — even without considering potential changes from President-elect Donald Trump. After a phase of rapid growth, installations this year are projected to decline by 1.8% to 40.5 gigawatts, according to Wood Mackenzie and the Solar Energy Industries Association. Future expansion is anticipated to remain relatively flat over the subsequent five years, with an average annual growth rate of about 2%.
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