Oil prices signalling a deeper secular decline in commodity markets? - Westpac

Sandeep Kanihama FXStreet Contributor

David Goodman, analyst at Westpac, suggests that the global commodity outlook has been clouded by the impact of tariffs, slowing global growth, weaker Chinese growth, the stronger US$, rising production and inventories.

Key Quotes

“For crude markets, the spike in October to over US85/barrel was driven by supply fears (US sanctions on Iran, Venezuela supply disruptions, limited spare production capacity), however the recent sharp falls in crude markets have been just as striking. While positioning was clearly a factor behind recent weakness, we note the US is now the world’s largest producer of crude and this has changed the global supply balance.”

“US Permian production has come to market much faster than many thought and a wave of pipeline capacity coming online next year will bring this crude to market meaning that OPEC+ will have their work cut out to maintain price stability. However, it seems fair to argue though that the weakness in crude/ nickel/ lead and zinc have been driven more by idiosyncratic factors rather than by secular forces.”

“Even after the recent drop, iron ore & coking coal prices are still up on a 6m annualised basis; LNG & thermal coal prices only modestly lower. The drivers of crude are not necessarily the drivers of commodities in general.”

Author

Sandeep Kanihama

FXStreet Contributor

Sandeep Kanihama is an FX Editor and Analyst with FXstreet having principally focus area on Asia and European markets with commodity, currency and equities coverage. He is stationed in the Indian capital city of Delhi.

EUR/USD tests nine-day EMA support near 1.1850

EUR/USD inches lower during the Asian hours on Monday, trading around 1.1870 at the time of writing. The 14-day Relative Strength Index momentum indicator at 56 stays above the midline, confirming improving momentum. RSI has cooled from prior overbought readings but stabilizes above 50, suggesting dips could stay limited before buyers reassert control.

GBP/USD flat lines as traders await key UK macro data and FOMC minutes

The GBP/USD pair kicks off a new week on a subdued note and oscillates in a narrow range, just below mid-1.3600s, during the Asian session. Moreover, the mixed fundamental backdrop warrants some caution for aggressive traders as the market focus now shifts to this week's important releases from the UK and the US.

Gold slides below $5,000 amid USD uptick and positive risk tone; downside seems limited

Gold attracts fresh sellers at the start of a new week and reverses a part of Friday's strong move up of over $150 from sub-$4,900 levels. The commodity slides back below the $5,000 psychological mark during the Asian session, though the downside potential seems limited amid a combination of supporting factors.

Bitcoin, Ethereum and Ripple consolidate within key ranges as selling pressure eases

Bitcoin and Ethereum prices have been trading sideways within key ranges following the massive correction. Meanwhile, XRP recovers slightly, breaking above the key resistance zone. The top three cryptocurrencies hint at a potential short-term recovery, with momentum indicators showing fading bearish signs.

Global inflation watch: Signs of cooling services inflation

Realized inflation landed close to expectations in January, as negative base effects weighed on the annual rates. Remaining sticky inflation is largely explained by services, while tariff-driven goods inflation remains limited even in the US.

Ripple Price Forecast: XRP potential bottom could be in sight

Ripple edges up above the intraday low of $1.35 at the time of writing on Friday amid mixed price actions across the crypto market. The remittance token failed to hold support at $1.40 the previous day, reflecting risk-off sentiment amid a decline in retail and institutional sentiment.