Commodity Roundup: All eyes on OPEC+ meeting



As the Ever Given ship in the Suez Canal refloats,  yields rise, and USD strengthens,  oil prices managed to settle higher yesterday.

All attention this week will be on the OPEC+ meeting on 1 April, where the group will need to decide on what to do with production cuts from 1 May. OPEC and its allies agreed to extend most oil output cuts into April, offering small exemptions to Russia and Kazakhstan. Earlier this month, most producers in the Opec+ group agreed to extend their current production curbs into April, with only Russia and Kazakhstan due to make modest supply increases.

Saudi Arabia, Opec’s biggest producer and exporter, also pledged to extend its unilateral supply cut of 1m bbl/day into next month. Prior to the weakness in the market, expectations were that the group would start easing cuts more aggressively from May. According to Bank ING, the wobble seen in oil prices means that OPEC+ will likely need to take a cautious approach once again. 


While the Ever Given was refloated in the Suez Canal, the metals complex has found it more difficult to stay afloat, with USD strength proving to be a major hurdle for metals. Aluminum fell by almost 1.4% on profit-taking, followed by copper and nickel. In the LME market, copper spreads eased on another sizable gain in exchange inventories. For aluminum, the Japanese premium for 2Q21 was settled at US$148-149/t (highest since 2Q15), a rise of 14% QoQ, and well above the US$82/t seen during the same quarter last year. The rebound in the premium was very much anticipated thanks to the recovering demand from major consuming sectors.

Another spike in US Treasury yields, along with USD strength weighed heavily on gold. COMEX gold retreated to as low as US$1,703 during the London trading session. Palladium also came under pressure, falling by more than 5% to an intra-day low of US$2521/oz yesterday, after Nornickel said on Monday it had stopped water flowing into its two major mines, Oktyabrsky and Taimyrsky in the Siberian Arctic and both were on track to fully resume production in coming months. 

Finally, steel futures in China rose to their highest level in a decade in anticipation of a seasonal recovery in demand, along with an uncertain production outlook. Steel demand in China is expected to be boosted by more vigorous construction activities over the coming peak season. However, there are uncertainties over production growth, following recent announcements of output restrictions to cut pollution in Tangshan.

Damon Harrison
Market Analyst, IPG Group