WCU: Russian production cut lifts crude oil
By Ole S. Hansen februar 13, 2023
The commodity sector spent the first full week of February trying to recoup some of the losses that hit the market after a stronger than expected US job report hit risk sentiment as the dollar strengthened and US Treasury yields moved higher in anticipation of additional US rate hikes followed by a prolonged period before any cut would be contemplated. Into the mix, we saw industrial metals adopt a more cautious stance with expectations for a strong demand rebound from a reopening China being moderate and delayed.
Meanwhile, the energy sector, having recently gone through a long-liquidation phase from overeager hedge fund bulls, received a bid after Russia, faced with a sanctions related drop in demand for its crude oil and fuel products, decided to cut March production by 500,000 barrels per day. Overall, the Bloomberg Commodity Index hit a one-year low earlier in the week after the strong US job report drove profit taking across the board. Since then, the mentioned energy-led recovery has seen it show the first weekly rise in three.
Earlier in the week, Saxo released its short-term market outlook and, in the commodity section, we highlighted the reason we believe the sector will see another positive year, the third in a row. This was driven by increased demand from China – the world’s top consumer of raw materials. Other major economies and regions may avoid or end up witnessing only a mild recession. These drivers being supported by deglobalisation leading to on- and friend shoring of production, geopolitical driven supply issues, the green transformation underpinning demand for metals, central banks providing a soft floor under gold and the prospect for a weaker dollar and eventually lower yields also providing support.Continue reading WCU: Russian production cut lifts crude oil