“Oil smells a recession”

The rise in the dollar index last week led to increased selling in commodity markets, and with the smell of recession in the air, oil began trading just below the critical level of $75 this week.

Last week, sharp declines were observed in commodity markets due to uncertainties about monetary policies and the Chinese economy. Cotton suffered the biggest blow with a 7.7% loss, followed by nickel with a 7% loss, rice with a 5.6% loss, and zinc with a 4.3% loss.

Aluminum also saw a 4.1% loss.

Zafer Ergezen, a futures and commodities markets expert, stated that the rise in the dollar index last week led to increased selling pressure in commodity markets.

Ergezen noted that the better-than-expected nonfarm payroll data in the US caused commodity prices to fall and that recession concerns continued to have an impact. He also highlighted that wheat production estimates continued to rise, corn stock expectations increased, and increased rice production estimates added to selling pressure.

Ergezen also stated that expectations of a decline in sugar beet production in France and a decrease in sugar production in India supported sugar prices. The dollar index, which rose last week due to Fed Chairman Jerome Powell’s statements, has declined this week.

The commodity experts predict that with the smell of recession in the air, oil is trading just below the critical level of $75.

We see that gold and silver have responded correctly in an environment where there is no liquidity crisis but there is a lack of confidence and a pause in Fed policy is expected, meaning they have risen. There is also a limited recovery in the gold-silver ratio.

Fitch revises metal and mining price forecasts

Fitch Ratings revised global metal and mining price forecasts, increasing short- and medium-term prices for copper, iron ore, coking coal, gold, and nickel.

Fitch, which raised its 2023 price forecast for zinc, also raised its 2025 forecast for aluminum while lowering its 2023 price outlook for Australian thermal coal. Fitch, citing the supply-demand balance in the market, said that raising copper price forecasts for the 2023-2025 period was due to the reopening of the Chinese economy supporting short-term growth in demand.

OPEC has maintained its forecast for global oil demand growth this year. According to the organization’s monthly oil market report, global oil demand is expected to reach 101.9 million barrels per day, up by 2.32 million barrels per day compared to last year. The demand in OECD countries is expected to increase by 230,000 barrels per day to 46.23 million barrels per day, while non-OECD countries’ demand is forecast to increase by 2.09 million barrels per day to 55.67 million barrels per day.

However, the forecast for oil demand growth in OECD countries has been revised downwards for the first and second quarters of this year due to expected economic slowdowns in OECD America and OECD Europe.

According to the report, global oil supply increased by 600,000 barrels per day to around 101.9 million barrels per day in February compared to the previous month, and it was 2.8 million barrels per day higher than last year’s level. OPEC’s daily crude oil production increased by 117,000 barrels per day to about 28.92 million barrels per day in February compared to the previous month, with OPEC’s share of global oil production standing at 28.4%.

During this period, Nigeria saw the highest increase in crude oil production within OPEC, while Angola saw the biggest decline. Daily production in Nigeria increased by 72,000 barrels per day in February compared to the previous month, while Angola’s production decreased by 52,000 barrels per day. Daily oil production in non-OPEC countries increased by 500,000 barrels per day to around 73 million barrels per day during the same period.

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