WTI crude oil down 2%, palladium touching 5 month lows, coffee touching 15 month lows

Summary:

• WTI crude continued their third session of losses.
• Despite the price increase and supply chain disruptions, demand for palladium has not yet returned to its pre-pandemic levels.
• The price of Arabica coffee futures dropped to its lowest level in 15 months as supply prospects improved.

WTI Crude Oil down amidst concerns of a worldwide recession

On Wednesday, WTI oil futures lost approximately 2% of their value and traded near the $87 per barrel level, continuing their third session of losses due to ongoing concerns over a worldwide recession-driven decline in demand. Renewed COVID- Hopes for a gradual economic reopening and a comeback in energy consumption were dashed by 19 outbreaks in China, the world's largest oil importer, which raised fears of potential new lockdowns. Fears that an aggressive tightening campaign by major central banks in developed economies could pull the world into a recession and reduce oil consumption were exacerbated by uncertainty about China's outlook. Additionally, according to API statistics, US oil stockpiles increased by nearly 5.6 million barrels last week, above forecasts for an increase of 1.1 million barrels. Even still, supplies around the world are still exceedingly scarce since OPEC+ cut production in November by 2 million barrels per day, and because the European Union is set to impose a ban on Russian oil in December.

✕ WTI Crude Futures Price Chart

Palladium touches 5-month lows

Palladium futures continued to decline, reaching a low of $1,820 per ounce, the lowest level in nearly five months, as the dollar index dipped back toward 20-year highs due to the possibility of further increases in interest rates, which damaged commodities. Prices for palladium are more than 40% lower than they were in March, since palladium is being replaced by platinum and interest rates are rising. In order to combat inflation even during a slowdown, the Federal Reserve, the most powerful central bank in the world, is projected to keep raising interest rates. Furthermore, despite the price increase and supply chain disruptions, demand for palladium, which is used in auto catalysts for gasoline-powered vehicles, has not yet returned to its pre-pandemic levels. The palladium market is projected to be balanced or in deficit this year and next year, according to analysts who predict supply-demand balances.

✕ Palladium Futures Price Chart

Coffee touching 15 month lows

The price of Arabica coffee futures dropped to its lowest level in 15 months as supply prospects improved and demand projections were expected to decline. World Weather reported that Brazil's 2023–24 coffee crop had grown in a "very excellent climate" due to frequent rain and plenty of sunshine, sparking hopes for a potential record production in the top producer Brazil the following year. Additionally, Colombia, Mexico, and Central America are predicted to produce better crops. Demand is expected to decrease at the same time that global growth slows. Even yet, according to the most recent statistics, ICE-certified arabica stocks hit a new low of 384,795 bags, which is a 23-year low, although traders predicted that stocks would soon rebound.

✕ Coffee Mar ‘23 Futures Price Chart

Sources: finance.yahoo.com, tradingeconomics.com