Since March, U.S. crude futures went from $81 to $85 a barrel as OPEC+ cuts supply.
Inputs that matter: Research from ICICI Bank sees $90/bbl to $95/bbl as a possibility for 2024.
- Barchart reports that conflicts in the Middle East with production curbs by the Organization of Petroleum Exporting Countries are pushing prices higher.
The opportunity: When oil moves upward, the price of sugar usually follows shortly after that.
- "Strength in crude prices benefits ethanol prices and may prompt global sugar mills to divert more cane crushing toward ethanol production than sugar, thus curbing sugar supplies."
Zoom in: With oil prices rising, market analyst John Kemp reports that traders have been buying oil at the fastest rate since 2020.
- According to Bloomberg, "Nearby oil futures are trading at large premiums to those later for a later date, indicating strong demand for barrels for immediate delivery."
Between the lines: Dry weather in India and a weakened currency in Brazil keep sugar from gaining momentum.
- The Brazilian real has fallen to a five-month low against the USD due to limited gains in sugar.
- The weaker real encourages export selling from Brazil's sugar producers.
- The Indian Sugar Mills Association (ISMA) reports a -0.7% decrease in sugar output due to the poorest monsoon rainfall in 5 years.
Follow the money: "The likelihood that continued restricted Russian product exports could further tighten U.S. petroleum supplies has suddenly forced re-calculation of U.S. (oil) balances across the rest of this month and possibly beyond," Jim Ritterbusch from energy consultancy Ritterbusch and Associates, told Reuters.
- The Energy Information Administration (EIA) reported an inventory build of 3.2 million barrels for the last week of March. While identical to last week's report, the news caused oil to continue its climb.
- The weakened sugar market does not provide enough Ethanol competition to reduce oil demand.
Go deeper: Subscribe to the free newsletter to learn more.
Read More
- https://www.bnnbloomberg.ca/oil-hits-us-85-for-first-time-since-october-as-market-tightens-1.2054064
- https://www.barchart.com/story/news/25181062/sugar-prices-supported-by-rally-in-crude-oil-to-5-month-high
- https://banananomics.co/oil_prices_are_rising_fast
- https://finance.yahoo.com/video/commodities-run-play-crude-oil-205515909.html
- https://oilprice.com/Energy/Crude-Oil/Oil-Moves-Higher-on-Fuel-Inventory-Draws.html