The Commodities Feed: US Dollar Weakness Provides Some Support
Energy markets experienced a slight uptick in oil prices, largely bolstered by the weakening US dollar, although ICE Brent remains below the $70 per barrel mark. Prices will continue to be influenced by global developments, particularly surrounding the proposed ceasefire agreement in Ukraine. Despite this diplomatic progress, uncertainty still looms regarding Russia’s position. Recent data from the American Petroleum Institute (API) revealed a notable increase in US crude oil inventories, rising by 4.2 million barrels against a market expectation of only 2 million.
This bearish indicator prompted some concerns, although declines in inventories at Cushing and gasoline stocks balanced out the negativity, with drops of 1.2 million barrels and 4.6 million barrels, respectively. The U.S. Energy Information Administration (EIA) adjusted its surplus expectations for the 2025 and 2026 oil markets downward, now predicting a 100,000 barrel per day surplus in 2025 and 500,000 barrels per day in 2026. In the natural gas sector, European prices saw a rise due to colder weather forecasts in Northwest Europe, which are anticipated to bolster demand. Additionally, the ongoing hostilities between Russia and Ukraine are likely contributing to sustained market support.
Current EU gas storage levels remain low, tracking at just under 36% full. Turning to metals, President Trump recently threatened to raise tariffs on steel and aluminum imports from Canada in retaliation for tax increases on electricity exports. However, following Ontario’s withdrawal of the surcharge, he quickly retracted his threat. Broader tariffs of 25% on these metals come into play today, presenting potential price increases, particularly impacting aluminum, where the US relies heavily on Canadian imports.
In agricultural commodities, the USDA’s recent World Agricultural Supply and Demand Estimates (WASDE) report indicated larger projected wheat stocks, increasing US ending stocks estimates from 794 million to 819 million bushels due to reduced export forecasts. In contrast, the domestic corn and soybean balances remained relatively stable, although global wheat stocks saw an upward revision.