Crude oil prices faced downward pressure recently, driven by the strength of the US dollar which created some headwinds for the market. As traders await the outcome of Saturday’s OPEC+ meeting concerning July output levels, they are adopting a cautious stance. This meeting has been moved up from its original Sunday schedule. Meanwhile, today the Joint Ministerial Monitoring Committee within OPEC+ will convene, but no significant changes in policy are anticipated.
In early morning trading, market sentiment appears to be improving, potentially influenced by remarks made by President Trump about Russia. In a social media statement, Trump criticized President Putin’s recent escalations in attacks on Ukraine, asserting that Putin is “playing with fire.” This comment comes amid a US drive for a ceasefire and heightens the potential for further sanctions against Russia, which could jeopardize energy supplies from the country. The ICE gasoil market continues to exhibit signs of tightness, with the prompt gasoil timespread seeing a backwardation that has widened to US$8/t. Despite continued concerns regarding broader demand, the crack remains relatively stable.
Over the past two weeks, speculators have shifted their positions from net short to net long in the market. Meanwhile, distillate stocks in the US remain low for this time of year, the lowest since 2003, although gasoil inventories in the ARA region of Europe remain adequate. In the European natural gas market, prices took a break with the Title Transfer Facility (TTF) settling 0.66% lower. The recent weakness in the JKM-TTF spread has contributed to this decrease.
Additionally, outages in Norway have resulted in reduced gas flows to Europe, particularly due to power-related issues at the Troll field. EU gas storage levels are on the rise, currently at just under 47% full, a notable drop from 69% at the same time last year. In the agricultural sector, CBOT wheat prices have come under renewed pressure from improving weather conditions across China, the US, and Europe. Increased rainfall has alleviated drought conditions in parts of China, with more rain predicted in the coming days.
Similarly, rains in Southwest Kansas are expected to enhance soil moisture for winter wheat crops in the US. Over in Europe, the European Commission has raised its wheat yield estimates despite some rainfall deficits in North-Western Europe.