Top commodity news: Oil & gas trading opportunities!
In top commodity news – Saudi Arabia’s real gross domestic product (GDP) contracted by 1.8% on a year-on-year basis in the first quarter of 2024, following a 3.7% drop in the fourth quarter of 2023.
This comes as lower oil output and crude prices weighed on the kingdom, flash estimates from Saudi Arabia’s statistical authority showed on Sunday.
It is the world’s largest oil exporter, and its production rate of about 9 million barrels per day now is well under its capacity of around 12 million barrels per day.
Top commodity news: Production cut
The production cut is part of an agreement OPEC announced last year that includes several other oil producers.
The cuts to production are apparent in the 10.6% dip in the oil sector in the first quarter compared with the previous year. As the top commodity news website reported this March: ‘Saudi Arabia has decided that domestic stimulus measures are no longer needed, bankers say.’
Leading commodity stories also signal that Saudi Arabia’s Vision 2030 plan (to diversify its economy away from its dependence on oil) needs big funding, in addition to the fact that the kingdom’s National Development Fund won’t be debt-free any time soon, as mega projects continue to fall behind schedule and a budget deficit of 79 billion riyals (roughly $21 billion) looms.
The kingdom is ready to adjust its strategies to overcome the economic challenges, Mohammed Al Jadaan, Saudi Arabia’s finance minister, told the World Economic Forum in Riyadh this week.
Meanwhile, among the other commodities that make up the bulk of Saudi exports, the IMF puts the average price of Brent crude so far in 2024 at around $83.50, well below Saudi’s self-identified needs, at $96.2 per barrel to balance its books, as per IMF forecasts.
The kingdom has also turned to debt markets to help alleviate its financial woes, raising $12 billion so far this year to plug its deficit.
Top commodity news: Aramco to tap bond market
More funds are promised in the headlines of commodities main news as the Public Investment Fund, the kingdom’s sovereign wealth fund, sold bonds for the largest amount ever, while Aramco, the kingdom’s oil giant, announced plans to tap the bond market later this year.
Despite these headwinds, the kingdom’s economy did moderately grow on a quarterly basis – seasonally adjusted growth reached 1.3% from the previous quarter, powered by a 2.4% rise in oil activities and a slight 0.5% growth in nonoil sectors.
While a jump of 3.8% in government activities was realised, it has been offset by a decline of 1% in government activities.
The 0.9% overall contraction compared sharply with 2022, when Saudi Arabia was the best performer in the G20 – largely because, owing to the bonanza from high oil prices, it also ran a fiscal surplus for the first time in nearly a decade.
Top commodity news: Shell’s (SHEL.L) Chief Executive Wael Sawan is pulling out of China’s power markets as he prioritises more profitable operations. According to top commodity news, Shell will exit China from the end of 2023, including the Power value chain activities of generation, trading, marketing inside China.
This play is part of Shell’s widening effort to sharpen its focus in the power sector, playing to its strengths. ‘We will choose to invest selectively in power, with a strong emphasis on realising value from our existing power portfolio,’ Shell’s director of investment and performance, Mike Crothers, said in a recent statement. ‘That means taking some tough decisions.
Top commodity news: Big move for Shell
Shell’s strategically decisive move is also mentioned in the same top commodity news, which reports that Shell has divested many other businesses and projects in recent times, including UK and German retail power markets and, more recently, offshore wind projects.
Shell is continuing to adjust and clean up its business portfolio in line with its stated objectives of profitability and focus on core.
In top commodity news, oil prices dropped more than 1% on Wednesday for the third straight session on renewed hopes for an Israel-Hamas ceasefire in the Middle East and on rising US crude inventories and production.
Brent crude futures for July lost 95 cents to $85.38 a barrel while U.S. West Texas Intermediate crude futures for June shed $1.16 to $80.77 at 0810 GMT, as disclosed in top commodity news.
In the meantime, a potential truce brokered by Egypt seemed to dampen volatility in markets, even as the Israeli Prime Minister Benjamin Netanyahu said he would not halt the bombing and shelling of Rafah. All of this made the latest commodity news headlines.
‘The crude market is weighed down by continued hopes for a ceasefire’ Ole Hansen of Saxo Bank pointed to continued worries about inflation in the US as a reason that expectations for further rate cuts by the Federal Reserve are being curtailed, which would limit prospects for a rebound in economic growth and demand.
What’s been causing oil to drop? Top commodity news sources say the answer might be the latest U.S. crude inventories that came in higher than anticipated. The American Petroleum Institute reported a stockpile increase of 4.906 million barrels in the week ended April 26.
The build came after traders and brokers polled by Platts had expected a decline of about 917,000 barrels, confirming the downward trend. Today’s price drop of almost 4% came on the back of this news, as well as a reports of a surge in U.S. output.
This month’s February headline was the largest monthly rise in about three and a half years. Right now, traders are watching for official data from the US Energy Information Administration, which will be released later today, to confirm these trends.
That will be the key to top commodity news in the next couple of days.
Top commodity news: G7 meeting
One of the world’s leading sources for top commodity news reported this week that the energy ministers of the Group of Seven (G7) major democracies have committed to quickly phasing out coal use in the power sector.
As one of the top commodity news sources put it, the G7’s ‘pledge to phase out coal use in power generation within the next 10 years is the latest step in an energy policy shift that could reshape global energy markets and emissions in the power sector’.
The G7 consists of Canada, France, Germany, Italy, Japan, the United Kingdom and the United States – which together account for 44% of the global gross domestic product according to the International Monetary Fund (IMF) in 2024 data.
Top commodity news reports show that G7 nations’ collective power production mix is diversified to include hydro, nuclear, coal, natural gas and renewables. Although coal contributed only to about 15% of total electricity generation in the G7 in 2023 (far below the global average of 37%, the move could be the beginning of a major shift in the global coal consumption pattern.
Based on top commodity news analysis, the absolute raw electricity output from coal by the G7 nations in 2023 was 1,115 terawatt hours, a mere 11% share of the globe’s total coal-fired electricity output.
This is down from 26.5% in 2013, underscoring the extent of coal-fuelled reductions that have already taken place just by building up natural pressures to decarbonise power systems.
Moreover, number-one commodity news draws attention to the huge variety in how each G7 country relies on coal, ranging from near-zero levels (France and the UK) to high levels (where more than half of the electricity in Japan, Germany and the US still comes from coal-fired plants).
This fact alone is reflective of the monumental difficulty the G7 is bound to face in meeting their rather ambitious pledge.
Growing commodity news also hints at the importance of thermal coal. Although not considered a transitional fuel by many, the fate of thermal coal has major implications for international trade flows, particularly given the fact that many states, such as Japan, are large importers for now because they have few domestic resources.
If, for example, the phase-out timeline of the G7 is followed, large shifts in the import and export patterns for coal could emerge.
The main suppliers, such as Australia, Indonesia, Russia and Canada, might well benefit from new global coal flows.
All in all, the G7’s pledge to end the use of coal in their power mix in the course of this decade is the biggest commodities story, with implications that extend far beyond energy markets in the effort to combat climate change. Others may follow in the footsteps of the G7 and reduce their coal use.
A broader decline of global coal demand thereafter just might be in the cards in the next decade.
In commodity news at the top of the heap, coal production and power generation in India reached record levels in March 2024, the Ministry of Coal announced yesterday in its first report for the new financial year.
The surge in output is a continuation of the effort by the mining and power sectors to ensure that the power cuts that darkened the country two years ago do not return.
India’s domestic coal production, at nearly 117 million tonnes in March, was the highest ever — up from 108 million tonnes in March last year and 96 million tonnes two years ago in March 2022.
This helped greatly to improve the reliability of India’s energy supply.
Power generators received nearly 74 million tonnes of coal from mining companies.
Top commodity news: Boost in production
This was up from 68 million tonnes last year, and 65 million two years ago, in March 2022, which allowed coal-fired generators to produce most of the coal-fired power (113 billion kilowatt-hours [kWh]), at a new high.
This record generation made up 81% of all power generated last month from all sources, up from 79% in March 2022.
Perhaps no other bit of top commodity news has been more crucial than the rise in coal – especially given a few years ago when fuel shortages led to country-wide blackouts.
Additional top commodity report news discusses how coal plants helped overcome the transmission system record load of 139 billion kWh in March 2024, substantially higher than less than 128 billion kWh in 2023 and 130 billion kWh in 2022.
Coal supply almost all increase in load, with record-amount solar supply compensated by less hydro, due to low reservoir.
The others were the stability of the grid frequency, seen holding (almost) steady at 50 cycles per second – an indicator of sufficient generation-and-load balance: last month, grid frequency went below the regulator-set lower limit of 49.9 Hertz for less than 6% of the time and not even 9% during the corresponding days last year, which was almost 15% in March last year.
Further, commodity news headlines brought news of softer weather this spring, which has kept air-conditioning and refrigeration loads in check – except in the Middle East, where summer is already hot.
Attention turns to renewables this summer, too, as wind and hydro can be expected to improve with the onset of the monsoon season, expected to be slightly wetter than usual.
Overall, this development in the coal sector is a big topic in resource news worldwide, proving that strategic resource management is important to maintain the energy security and economic solidity of one of the world’s major emerging markets.
Latest oil trends: Prices rally, traders eye new Namibia deposits!
Top Commodity News Corn-based ethanol, produced with climate-friendly farming practices qualifies for the Biden administration’s new guidance for its sustainable aviation fuel (SAF) subsidy programme.
The new rules represent a key piece of the administration’s broader environmental agenda, as well as the multibillion-dollar US ethanol industry.
Top commodity news: SAF subsidies
The qualification means that ethanol production meets the criteria for subsidies, although US ethanol producers are keen to receive the subsidies, that come with a hefty price tag.
This guidance specifies that ethanol-based SAF, which is necessary to make production economically viable, will qualify for the SAF subsidies only if it reduces emissions by at least 50% compared with petroleum jet fuel.
Corn farmers would have to adopt agricultural practices that sequester carbon, such as no-till farming and cover-cropping and efficient fertiliser use to meet this criteria.
According to news from the top commodity news bulletin, soy-based biodiesel will also qualify under similar specifications.
The policy is part of broader efforts by the administration of President Biden to spur the development of a market for lower-emissions aviation fuels – as emissions from air transport grow rapidly, now accounting for around 2% of US emissions.
And the subsidies square with the Biden-Harris administration’s goal of ‘building a clean energy future that creates good-paying union jobs throughout the American economy’, as Secretary of Agriculture Tom Vilsack recently put it.
Lead commodity coverage also notes that the SAF subsidy programme will initially cover fuels produced in 2023 and 2024, with revisions or expansion to follow.
The amount of subsidies awarded tops out at $1.25 per gallon for fuels demonstrating a 50% emissions reduction, compared with fossil jet fuels, under a default version of the GREET climate model, which determines lifecycle emissions.
This escalates to $1.75 per gallon for those that show a reduction of more than 50%, based on alternate GREET revisions.
Notwithstanding the administration’s positivity – ‘These practices on the agricultural landscape are going to be key to realizing the climate benefits that we want to achieve,’ said Bill Hohenstein, director of the USDA’s Office of Energy and Environmental Policy – environmental groups continue to question whether such agricultural practices can actually deliver the climate benefits promised.
These issues, as well as the broader politics underpinning them, are the subject of regular reporting in leading commodity news outlets that cover debates over whether the massive requirements of fuel for aviation decarbonisation can be met by the bioenergy supply.