Five key charts to watch in global commodities this week
Earnings season kicks off for the world’s biggest oilfield services companies, with analysts expecting another blowout quarter. In other commodities, sugar prices are soaring while copper may see support with stockpiles near an 18-year low. Here are five notable charts to consider in global markets as the week gets underway.
Oilfield Services
Oilfield contractors are proving resilient as clients pay more to rent the hard-to-find drilling rigs in an era of tight crude supplies. Baker Hughes Co. is the first out of the earnings gate on Wednesday, while SLB — which recently changed its name from Schlumberger — follows on Friday. Halliburton Co., scheduled to release early the following week, is set to see the biggest surge of the three in profit excluding one-time items, with a jump of 94% from the year-ago period to $609 million, according to consensus estimates.
Sugar
Raw sugar futures have been on a tear, rallying to their highest level in more than a decade last week amid expectations for limited exports out of India and concerns about production in other key growers. The surge threatens to add to costs for manufacturers of everything from fizzy drinks to baked goods and maintain pressure on global food inflation. It has also pushed the sweetener into two technical extremes: above 70 on its 14-day relative strength index and through the upper limit of its trading envelope, a measure built around moving price averages. Both developments can often signal to some traders that a reversal is in store. Furthermore, the widening of the envelope’s upper and lower bands can also be a precursor to greater price swings.
Copper
The estimated 1,600 executives, bankers and traders drifting into the Chilean capital for this week’s Cesco Week copper conference will feel fairly confident about the industry’s prospects given official stockpiles are near the lowest in 18 years. While participants will be watching data out of China for further clues on demand, those low warehouse inventories — standing at less than a week’s worth of consumption — provide a formidable safety net to any negative surprises. The longer-term outlook is even more auspicious, with CRU Group analysts forecasting copper to rise above above $10,000 a metric ton from about $9,000 now as sluggish mine supply and additional demand from the energy transition push the market into deeper deficits.
LNG
Exporters are taking a record slice of US natural gas output, with operations at a key terminal in Texas returning to normal after a prolonged shutdown. Flows of the heating and power-generation fuel to liquefaction facilities along the Gulf Coast jumped to 14.9% of total domestic supplies on Sunday before retreating slightly on Monday, according to BloombergNEF data based on pipeline nominations. LNG demand, which is set to remain strong as Europe replenishes its inventories ahead of winter and China’s economy recovers, has been a rare bright spot for traders of American natural gas. Prices for the commodity have fallen about 50% this year after an abnormally mild winter caused inventories to swell relative to usual levels.
Coal
China is leading a surge in Asian coal imports well past the end of winter, an unseasonal move. Seaborne shipments of the power-generation fuel reached 25 million tons in March, a record for the dataset tracked by Marcura. That’s in stark contrast to South Korea, whose imports have dropped as milder weather reduces electricity demand. Large energy purchases in spring are fairly unusual since power demand is typically lower as the weather shifts. China’s decision to stock up on coal to drive its economic rebound is helping keep drybulk freight rates buoyant — average Panamax time-charter rates more than doubled from early February levels to $13,981 a day last week. Indian coal imports could keep April volumes robust as the nation restocks ahead of sizzling summer heat, but keep an eye on China and whether it will sustain its purchases given the global economic slowdown.