Commodities: Global
Expanded OPEC Production continued to weigh on energy markets as the cartel increased production quotas for the sixth time this year at their early September meeting. OPEC agreed to raise oil production by 137,000 barrels per day (bpd) for October, particularly as concerns mounted over potential supply disruptions linked to Russia. 
This was slightly less than expected and begins unwinding the 1.65 mbpd of cuts from April 2023. Recall that the majority of OPEC+ excess capacity of 5.7 million bpd (mbpd) is held by Saudi Arabia and the United Arab Emirates at 4.2 mbpd. Some members are producing above capacity currently, so analysts estimated that only 60,000 bpd will be effectively added. Of note, Syria exported 600,000 barrels of heavy crude oil at the end of August from the port of Tartus, the first known official export of Syrian oil in fourteen years. Syria last full year of exports were at 380,000 bpd in 2010, the year before protests against Bashar al-Assad’s rule spiraled into a civil war. The new regime badly needs hard currency revenue to maintain its grip on power. The International Energy Agency said that supply will rise by 2.5 mbpd in 2025, up from 2.1 million bpd previously forecast in their latest monthly report, and by a further 1.9 mbpd next year.
The EIA estimated that the United States Produced 13.4 MBPD of oil in August, a record (see left). US operating oil rigs ticked higher to 412 as of August 29th versus 410 as of August 1st, as the fall in oil prices prompted idle wells. Per AAA, the US average regular unleaded gasoline price per gallon moved higher to $3.21 (+7¢) at the end of August. Gasoline prices have decoupled from oil prices over the last month on driving demand and steady exports. US exports of liquefied natural gas also reached an all-time high in August, totaling 9.33 million metric tons, as plants exited planned maintenance programs and Venture Global’s Plaquemines facility increased output.
Brazilian farmers were expected to harvest 137 million metric tons of corn in 2024/25, crop agency Conab said after raising its estimate for second-corn production by 5 million tons to 109.6 million tons. Conab also increased its Brazilian corn export forecast to 40 million tons from 36 million tons. Argentina was forecasted to plant its second-largest corn crop starting in September. US corn is set for record yields at 184.3 bushels per acre. Growth patterns and harvest is on pace with historical averages. Australia’s wheat output was projected to drop 1% this year to 33.8 million metric tons, although the production was still poised to be 22% above the 10-year average. Beef production down under was forecasted to reach a record 2.8 million tons in 2025, driven by stable carcass weights and increased slaughter. Global demand for Australian red meat exports should keep growing due to continued herd contractions in the US. New World Screwworm also threatens US herds, assuming it can make the jump through Mexico. Right on cue, the first human case in the US was detected in an El Salvadorian man who had returned from Guatemala in mid-August. The disease is considered survivable if treated early enough but otherwise fatal.
Gold reach record levels in early September, hitting over $3,500 per ounce. At only about 4% of global assets, even a small shift of 0.5% to gold could yield 18% annualized returns, taking gold prices toward $6,000 by early 2029, JP Morgan. Silver broke the $40 barrier but has yet to reach its high over $48 per ounce. Lower US interest rates, weaker US dollar, central bank jitters or financial panic / concerns / worries were all cited as reasons for higher.
Finally, an interesting graph… makes me feel better that I walk to work at 5 AM!
All the best in your investing!
David Burkart, CFA
Coloma Capital Futures®, LLC
www.colomacapllc.com
Special contributor to aiSource