WTI Crude Oil Gains 3% On Wednesday, Palladium Touching 4-week Highs, Coffee Futures Falling

Summary:

• Concerns around crude supplies drive prices.
• The shortfall on the palladium market persists.
• Likelihood of favorable weather in Brazil driving coffee futures down.

WTI Crude oil demand threatened

Wednesday saw a nearly 3% increase in WTI crude futures to over $86 a barrel due to worries about supply disruptions following President Vladimir Putin's announcement of a partial military mobilization in Russia. Gains occurred before the US Federal Reserve raised interest rates by a disproportionate amount, which the markets believe will stunt global economic development and reduce demand for oil. US oil inventories grew by approximately 1 million barrels last week, according to industry statistics, while gasoline and distillate stockpiles rose by about 3.2 million and 1.5 million barrels, respectively. Saudi Aramco and Crescent Petroleum executives, in separate remarks, identified underinvestment in the oil industry as a significant output barrier and the primary cause of the current global energy crisis. According to Reuters, OPEC+ is currently falling 3.58 million barrels per day, or around 3.5%, short of its goals.

✕ WTI Crude Futures Price Chart

Palladium touching 4-week highs

As the dollar index deviated from 20-year highs, palladium futures increased their gains to $2,200 per ounce, the highest level in almost four weeks. Nevertheless, in spite of rising interest rates and slowing GDP, palladium prices are 30% lower than they were in March. It is anticipated that central banks would keep raising interest rates to keep inflation from soaring even when the economy is slowing. 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. However, there is still a shortfall on the palladium market.

✕ Palladium Dec ‘22 Futures Price Chart

Coffee touching 1-month lows

The price of Arabica coffee futures on the ICE was near its lowest level since August 19th due to the weaker real and the likelihood of favorable weather in Brazil, the world's largest producer. According to Climatempo, heavy and frequent rains would fall in the Sao Paulo and Minas Gerais coffee-growing regions from the end of September to the beginning of October. The rain should increase soil moisture levels and encourage coffee tree flowering for the crop of Brazil coffee in 2023–2024. The Green Coffee Association also announced that U.S. green coffee stocks for August increased by 3.6% monthly and 5.2% annually, reaching a 2-year record of 6,450,086 million bags.

✕ Coffee Dec ‘22 Futures Price Chart

Sources: finance.yahoo.com, tradingeconomics.com