Commodities: Global
OPEC Oil Production Rebounded in October from its lowest point this year as Libya resolved a political crisis, although a further Iraqi effort to meet its pledged cuts limited the increase. The Organization of the Petroleum Exporting Countries pumped 26.3 million barrels per day (mbpd) last month, up 195,000 bpd from September. OPEC+ confirmed it would extend its output cut of 2.2 mbpd until at least January, which had
already been deferred from October. Direct missile and air- strikes between Israel and Iran rattled markets though tensions seemed to calm down a notch by the end of the month. While so far avoided, a major strike by Israel on Iran’s oil-exporting capacity could take 1.5 mbpd off the market, according to Citigroup. If Israel struck minor infrastructure, such as downstream assets and storage facilities, between 300,000 and 450,000 barrels of output could be lost. China would be the most vulnerable to an escalation as it is the largest consumer of Iranian oil (as it ignores sanctions) and that dependency is increasing (see graph left).
US Oil production Shifted Higher to 13.5 mbpd although operating oil rigs ticked ratcheted lower from 484 as of September 27th to 479 on November 1st. From these record levels, there is little room for large-scale additional net production (but plenty for imports from a Keystone pipeline under a new administration. Per AAA, US average regular unleaded gasoline prices per gallon fell again to $3.12 (-8¢) by the end of the month. In other US petro-political news, Phillips 66 announced plans to halt fuel production at its Los Angeles-area plant in what will be the biggest California refinery shutdown, citing uncertainty about its “long-term sustainability” amid an increasingly acrimonious battle between Governor Gavin Newsom and the fossil-fuel industry. The largest US refiner by market value announced that the shutdown will be complete in the fourth quarter of 2025, but pledged to continue supplying Golden State motorists with fuels sourced from its own refining network and elsewhere. The closure will impact roughly 8% of California’s refining capacity. Recall that in August, Chevron declared it would quit the state that has been home for 145 years and relocate to Texas.
Chinese Oil Imports Fell last month as refiners grappled with weak margins and shut units for planned maintenance. Inflows sank to 45.5 million tons in September, according to customs data on Monday. That was -7.4% lower than August and equal to 11.1 million barrels a day, according to Bloomberg calculations. Feeble refining margins and seasonal maintenance cast shadows on the outlook for the world’s largest oil importer. The International Energy Agency saw sluggish Chinese demand as “the principal drag on overall growth.” They forecasted a looming supply surplus due to Non-OPEC+ production increases outpacing the demand forecast. The IEA forecasted non-OPEC growth at 1.5 mbpd this year and next, with higher production from the U.S., Guyana, Canada and Brazil – above the rate of demand growth of 1.2 mbpd.
USDA’s Weekly Crop Progress report showed the US corn harvest basically done at 91% complete while soybeans came in at 94% as of November 1st. US farms have held steady at high levels crop conditions for corn and soy but wheat conditions have stayed low at only 41% rated good/excellent. China’s grain output was set to exceed a record 700 million metric tons this year, +0.7% higher than the 2023 harvest of 695.41 million tons.
Global Gold Demand swelled about +5% in the third quarter, setting a record for the period and lifting consumption above $100 billion for the first time, according to the World Gold Council. The increase, which saw volume climb to 1,313 tons, was underpinned by stronger investment flows from North America and Europe that offset waning appetite from Asia.
And in other news:
Britain became the first G7 country to end coal-fired power production with the closure of its last plant, Uniper’s Ratcliffe-on-Soar in England’s Midlands on November 4th. It will end over 140 years of coal power in Britain.
France’s wine production is seen dropping 22% in 2024 due to bad weather. Output in the world’s top wine producer is likely to be 37.5 million hectoliters, -15% below the five-year average, according to an
agriculture ministry report citing estimates to October 1st. All types are likely to see a drop in supply, particularly those from Burgundy, Beaujolais and Champagne and wines intended for the production of brandy.
All the best in your investing!
David Burkart, CFA
Coloma Capital Futures®, LLC
www.colomacapllc.com
Special contributor to aiSource