Five Key Charts to Watch in Global Commodities This Week

Excess fluid sits on the rim of a barrel of oil based lubricant. Photographer: Chris Ratcliffe/Bloomberg

Written by
Sophie Caronello
Written by

Sophie Caronello

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(Bloomberg) -- The Organization of Petroleum Exporting Countries and its allies announced a surprise output cut, while Exxon Mobil Corp. is due to update investors on the company's plans to help reduce greenhouse gas emissions in support of a net-zero future. Here are five notable charts to watch in global commodities as the first trading week of April gets underway.

OPEC+

Oil surged to start the week after OPEC+ unexpectedly announced production cuts on Sunday of more than 1 million barrels a day, abandoning previous assurances that it would hold supply steady. It's a significant reduction for a market where supply was looking tight for the latter part of the year. Saudi Arabia led the cartel by pledging its own 500,000 barrel-a-day supply reduction. In response, Goldman Sachs Group Inc. increased its price forecast for Brent at year-end to $95 a barrel.

Big Oil

Exxon will provide details of its low-carbon solutions business at an investor event on Tuesday. Through a combination of carbon capture and storage, hydrogen and lower-emission fuels, the oil behemoth aims to achieve net-zero Scope 1 and Scope 2 greenhouse gas emissions from its operated assets by 2050. There is also added financial incentive to achieve these goals: the US Inflation Reduction Act, passed last year, offers generous tax credits for all forms of clean energy including Exxon's favored technology — carbon capture.

Electric Vehicles

If you're looking to buy an EV in the US, you'd better move quickly. The Biden Administration last week revealed long-awaited criteria to qualify for the full $7,500 tax credit provision in the Inflation Reduction Act, a development that is expected to reduce the number of eligible models. The new rules, which aim to make the US less reliant on batteries and critical minerals shipped from China, will take effect on April 18. Until then, consumers can claim the full credit when they purchase a currently eligible EV. Generous tax incentives so far have led to a jump in adoption in the US.

Food Costs

The United Nations is set to release its monthly report on global food costs on Friday. Its price index, which tracks five major exported food commodity groups, fell for 11 straight months in February to the lowest level since September 2021 after surging to a record last year following Russia's invasion of Ukraine. The decline was driven by a huge plunge in cooking oils, as well as drops in dairy and meat. Even so, food inflation is very real — the index is still above the 10-year average — and it takes time for these decreases to filter through to supermarkets, where prices remain elevated due to energy, labor and transport costs.

Shipping

A milder-than-expected winter in Europe has has made it less lucrative for Asian traders to export diesel supplies to the continent amid weaker consumption. That has contributed to a build-up of oil product stockpiles in Singapore, as traders put excess cargoes into storage tanks. The oversupply is being exacerbated by a growing number of idled container ships. As more vessels are temporarily taken out of service globally, demand for bunker fuel that the ships use has also dropped. Stockpiles of fuel oil in Singapore — one of the most popular refueling hubs in Asia — are near a six-month high. Refining margins have taken a hit, and while upcoming plant maintenance could trim the supply, slower demand for shipping could linger for the next few months as the global economy slows.