The target from the descending wedge is the beginning of the pattern at 2.27. It is well on its way there now after breaching the 2.15 interim swing high today. Further, a breakout of the 20-Day MA triggered again today with prices continuing to rise from there.
Given the bullish momentum since Tuesday’s daily reversal and hammer candlestick breakout it looks like the retracement may have found a bottom. It will be clearer if natural gas can get above 2.27 and stay above that level. However, today’s advance also triggered a bullish reversal on the weekly chart with a move above last week’s high of 2.15. A daily close above that level will further confirm strength of the reversal.
200-Day MA Higher Target at 2.36
If the 2.27 swing high can be exceeded the next target is up around the 200-Day MA, currently at 2.36. Very close by is the 38.2% Fibonacci retracement at 2.37. Higher up is a target zone that begins around the 50-Day MA, which is currently at 2.45. The previous interim swing low from late-May is then at 2.47, followed by the 50% retracement at 2.52. Last week’s low may have been the low price for natural gas before it attempts to break out above the top downtrend line. The prior dotted trendline remains a little lower for reference.
Higher ABCD Pattern Target is 3.46 (long-term)
Since a bottom has likely been established a rising ABCD pattern can be drawn to help identify higher price targets. The first target from the pattern is at 3.46. That is a pivot level where the price appreciation seen in the AB leg up matches the CD leg up. Once price symmetry is established the potential for a change increases. Also, a breakout through the pivot is a sign of continued strength.
For a look at all of today’s economic events, check out our economic calendar.
In its latest short term energy outlook (STEO), the U.S. Energy Information Administration (EIA) lowered its Brent spot average price forecast for 2024 and 2025.
The EIA now sees the Brent spot price averaging $84.44 per barrel this year and $85.71 per barrel next year. In its previous July STEO, the EIA projected that the Brent spot price would average $86.37 per barrel in 2024 and $88.38 per barrel in 2025.
A quarterly breakdown in the latest STEO shows that the EIA expects the Brent spot price to average $84.06 per barrel in the third quarter, $85.97 per barrel in the fourth quarter, $88.66 per barrel in the first quarter of 2025, $86.33 per barrel in the second quarter, $85 per barrel in the third quarter, and $83 per barrel in the fourth quarter.
In its previous STEO, the EIA forecast that the Brent spot price would average $87.97 per barrel in the third quarter, $89.64 per barrel in the fourth quarter, $90.66 per barrel in the first quarter of next year, $89 per barrel in the second quarter, $88 per barrel in the third quarter, and $86 per barrel in the fourth quarter.
“The Brent crude oil spot price averaged $85 per barrel in July, up $3 per barrel from the average in June,” the EIA stated in its August STEO.
“Although the monthly average Brent spot price was higher in July, daily spot prices fell toward the end of the month driven in part by signals that global economic conditions may be slowing, which has the potential to reduce global oil demand growth,” it added.
“Although market concerns about the economy have lowered crude oil prices in recent days, we still expect that the most recent round of OPEC+ production cuts will reduce global oil inventories over the next three quarters in our forecast and push oil prices higher,” they continued.
In the STEO, the EIA noted that it expects global oil inventories will decrease by an average of 0.8 million barrels per day in the second half of 2024, “with further declines in 1Q25”.
“We anticipate that the market will gradually return to moderate inventory builds in mid-2025 after the expiration of voluntary OPEC+ supply cuts in 4Q24 and as forecast production growth from countries outside of OPEC+ begins to outweigh global oil demand growth,” the EIA added.
“We estimate that global oil inventories will increase by an average of 0.3 million barrels per day in the second half of 2025,” it continued.
In a report sent to Rigzone this week, Bjarne Schieldrop, the Chief Commodities Analyst at Skandinaviska Enskilda Banken AB (SEB), revealed that SEB’s “target is for a Brent crude price of $85 per barrel for 2024”.
“So far it has averaged $83.3 per barrel. Distribution of prices within a year typically varies +/-USD 15 per barrel from the mean. That implies that we should see both $100 per barrel and $70 per barrel,” he added.
“Last year we had a high of $97.7 per barrel and a low of $70.1 per barrel. So far this year we have had a high of $92.2 per barrel and a low of $74.8 per barrel,” he added.
A separate report sent to Rigzone this week by Standard Chartered Bank Commodities Research Head Paul Horsnell showed that the company expects the ICE Brent nearby future crude oil price to average $106 per barrel in the fourth quarter of this year and $109 per barrel overall in 2025.
A research note sent to Rigzone by the JPM Commodities Research team last Friday showed that J.P. Morgan expects the Brent crude price to average $83 per barrel this year and $75 per barrel next year.
In a Rystad Energy oil macro update sent to Rigzone on Tuesday by the Rystad team, Svetlana Tretyakova highlighted that oil prices were “having a volatile start to the week, dropping as low as $75 on Monday, the lowest price since December 2023, before rebounding later in the day”.
“Prices plunged last week as fears of a recession in the U.S. gathered pace and previously bullish investors sold their petroleum positions, but the possibility of supply disruptions in the Middle East are helping to keep prices from falling off a cliff,” Tretyakova added in the update.
script type=”text/javascript”>
var hasDelayTriggerd = false;
var loadJS = function (url, implementationCode, location) {
//url is URL of external file, implementationCode is the code
//to be called from the file, location is the location to
//insert the
The mood improved after the United States published encouraging employment figures.
Concerns about Federal Reserve’s interest rate cuts remain in the background.
XAU/USD trades with a firmer tone and may extend its advance once beyond $2,424.
Spot Gold is on the run after recovering the $2,400 mark, peaking at $2,424.01 in the American trading session. The bright metal surged as encouraging United States (US) data brought some relief to financial markets, weighing on US Dollar demand. The Greenback, however, is firmer against the Swiss Franc (CHF) and neutral against the Japanese Yen (JPY).
Wall Street trimmed early gains and trades with a firm tone following the release of Initial Jobless Claims, which decreased to 233K from a previously revised 250K, also better than the 240K anticipated. In the absence of major news, the encouraging figure underpinned the mood and helped US indexes reverse most of their Wednesday losses.
Gold’s advantage could be understood by persistent speculation the US Federal Reserve (Fed) will deliver more aggressive rate cuts than previously estimated. A few months ago, speculative interest was considering one timid cut before year-end, with limited hopes for a second one. However, the latest macroeconomic data suggesting the economy could face a recession spurred speculation of potential three cuts before year-end. Even further, market participants are starting to believe the Fed could trim rates before the upcoming September meeting in an out-of-schedule move.
Today’s employment-related data spurred some optimism, but it seems pretty irrelevant when compared to the tepid Nonfarm Payrolls (NFP) report released last Friday, partially responsible for the latest panic trading. Overall, it seems that speculative interest has finally priced in more aggressive rate cuts and is now waiting for the next catalyst.
XAU/USD short-term technical outlook
XAU/USD is firmly up after closing in the red for five consecutive days but is still confined within Fibonacci levels. The pair is currently trading around the 38.2% retracement of the June/July rally at $2,411.20, an immediate near-term support. The 23.6% retracement provides resistance at $2,438.80.
Meanwhile, technical readings in the daily chart support a bullish extension, particularly if the pair extends its intraday rally before the aforementioned high. Technical indicators have turned firmly north but remain within neutral levels. At the same time, XAU/USD battles a flat 20 Simple Moving Average (SMA) but remains above bullish 100 and 200 SMAs.
Technical readings in the 4-hour chart skew the risk to the upside, but the momentum seems limited. The pair is currently trading above a mildly bearish 100 SMA, while the 20 and 200 SMAs lack directional strength below it. Finally, technical indicators are entering positive ground with modest upward slopes, not enough to confirm another run north.
Silver prices appreciate as traders price in a deeper rate cut by the Fed in September.
CME FedWatch tool indicates 72.0% odds of a 50-basis point Fed rate cut in September, up from 11.8% last week.
Escalated Middle East tensions support safe-haven demand for precious metals like Silver.
Silver price (XAG/USD) halts its three-day losing streak, trading around $26.80 per troy ounce during the European session on Thursday. The prices of non-yielding assets like Silver gain ground due to the rising expectations of a US Federal Reserve (Fed) rate cut in September.
The Fed is highly expected to implement a more aggressive rate cut beginning in September, following weaker employment data from July that has heightened concerns about a potential US recession. According to the CME FedWatch tool, there is now a 72.0% probability of a 50-basis point (bps) interest rate cut by the US Federal Reserve (Fed) in September, up from 11.8% a week earlier.
Additionally, safe-haven demand for precious metals like Silver has increased due to escalating geopolitical tensions in the Middle East. CNN reported two US intelligence officials, saying that Iran and its allies are preparing for potential retaliation against Israel in response to the recent killings of a top military commander of Iran’s Hezbollah in Lebanon and a senior Hamas leader in Tehran.
Last week’s disappointing GDP figures and an unexpected rate cut by the People’s Bank of China (PBOC) have added further selling pressure on Silver. Given that Silver is essential for numerous industrial applications, especially in China, the world’s largest manufacturing hub, these developments have intensified concerns about demand. Traders shift their focus to Consumer Price Index data scheduled for release on Friday, to gain further impetus on the Chinese economy.
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold’s. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold’s moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
Gold price snaps a five-day downtrend early Thursday.
Markets turn cautious, as Middle East geopolitical woes return to the fore.
The US Dollar and the US Treasury bond yields weaken amid persistent dovish Fed bets.
Gold price awaits a symmetrical triangle breakdown confirmation on the daily chart.
Gold price is attempting a tepid bounce while below $2,400 early Thursday, pausing a five-day losing streak, as the US Dollar (USD) sees fresh selling alongside the US Treasury bond yields.
Gold price comes up for air, Iran-Israel conflict in focus
Despite a cautious market mood, in the face of resurfacing Middle East geopolitical tensions, the USD remains broadly subdued. A pullback in the US Treasury bond yields drags the Greenback lower. Risk-off flows return and lift the demand for the US government bonds, knocking down the yields while lifting Gold price.
Citing two sources familiar with intelligence on the matter, CNN News reported late Wednesday that Hezbollah appears increasingly set to act against Israel “independent” of an expected Iranian response to the recent killing of two terror leaders. According to CNN, multiple officials say Iran seems to still be hashing out its retaliation plans.
Meanwhile, markets speculate over aggressive US Federal Reserve (Fed) easing this year, as economic slowdown risks lurk, keeping the downbeat tone intact around the US Dollar. Markets are now pricing in a 75% chance of the Fed cutting rates by 50 basis points (bps) in September, the CME Group’s FedWatch tool showed, with major brokerages also anticipating a large rate cut in the next meeting, per Reuters.
Looking ahead, Traders will closely monitor the developments surrounding the potential Iranian attack on Israel, which if happens will likely provide extra legs to the rebound In Gold price. Meanwhile, the weekly US Jobless Claims data will entertain markets and offer fresh hints on the country’s labor market situation, impacting the value of the US Dollar and the Gold price action.
Gold price technical analysis: Daily chart
As observed on the daily chart, Gold price has been teasing the rising trendline support at $2,380, eyeing a downside break from a seven-week-old symmetrical triangle formation on a daily candlestick closing below that level.
The key leading indicator, the 14-day Relative Strength Index (RSI), is prodding the 50 level from downside, suggesting that there are risks for an extended Gold price rebound.
However, Gold buyers will need to recapture the 21-day Simple Moving Average (SMA) support-turned-resistance at $2,415 to negate the near-term bearish bias.
Further up, they will target the static resistance at $2,425 en-route the previous record high of $2,450.
If the triangle breakdown is confirmed, the immediate support would be seen at the 50-day SMA of $2,368, below which the $2,350 psychological level will get tested.
The 100-day SMA at $2,344 could act as a tough nut to crack for Gold sellers.
Economic Indicator
Initial Jobless Claims
The Initial Jobless Claims released by the US Department of Labor is a measure of the number of people filing first-time claims for state unemployment insurance. A larger-than-expected number indicates weakness in the US labor market, reflects negatively on the US economy, and is negative for the US Dollar (USD). On the other hand, a decreasing number should be taken as bullish for the USD.
Silver drops 1.38% to $26.59, pressured by strong US Dollar.
Key support levels at $26.51 and $26.06 eyed amid bearish momentum.
Reclaiming $27 could push silver to test resistance at $27.56 and $28.00.
Silver’s price extended its losses for the third straight day and stayed below $27.00 amid increasing geopolitical fears spurred by the Middle East conflict. Despite that, the grey metal failed to gain traction, capped by the rise of US Treasury yields and a strong US Dollar. The XAG/USD trades at $26.59, down 1.38%.
XAG/USD Price Forecast: Technical outlook
Silver’s struggle to remain above $27.00 could pave the way for a deeper pullback and test key support levels. Momentum favors sellers, as the Relative Strength Index (RSI) remains in bearish territory.
The XAG/USD first support would be the August 5 low of $26.51, followed by the 200-day moving average (DMA) at $26.06. Once those levels are surpassed, the next demand zone will be the March 27 pivot low at $24.33.
Conversely, if XAG/USD makes a U-turn and buyers reclaim $27.00, this can pave the way to test the August 6 peak at $27.56. Once hurdle, the next resistance would be the $28.00 mark ahead of the August 5 high at $28.67.
XAG/USD Price Action – Daily Chart
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold’s. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold’s moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
Oil prices climbed in Asian trade on Thursday due to a significant drop in U.S. inventories, which raised hopes for sustained demand in the world’s largest fuel consumer. Bargain buying helped oil prices rebound from multi-month lows, but the rally is losing momentum.
Negative economic data from China, particularly regarding crude imports, has stymied further gains. Both oil contracts have faced sharp losses recently due to fears of a potential U.S. recession impacting demand.
Financial markets looking more stable after BOJ Governor Shinichi Uchida´s comments.
Federal Reserve’s future actions still under investors’ scrutiny.
XAU/USD remains below $2,400 but lacks clear directional strength.
Spot Gold stabilized just below the $2,400 mark, with the US Dollar out of investors’ radar amid a better market mood. The Greenback eased unevenly across the FX board, appreciating only against safe-haven JPY and CHF. XAU/USD, in the meantime, trades near its daily opening at $2,390.34.
Most of the market’s relief came from Asia. Bank of Japan (BoJ) Deputy Governor Shinichi Uchida hit the wires and said the BoJ would not raise interest rates if global markets remained unstable, cooling down the chance of a near-term hike. The news put a halt to the Japanese Yen (JPY) rally, as the currency soared after the BoJ hiked rates last week by 15 basis points (bps), while Governor Kazuo Ueda stated afterwards that interest rates are still at a “very low” level. Even further, government bond yields extended their weekly recovery after plummeting to multi-year lows earlier in the month.
Data-wise, the calendar had nothing relevant to offer, with speculative interest still focusing on what policymakers could do next. The US Federal Reserve (Fed) is also in the eye of the storm, as concerns about economic growth triggered by the latest macroeconomic data spurred speculation that the central bank may trim interest rates before the next monetary policy meeting scheduled for September.
XAU/USD short-term technical outlook
In such a scenario, Gold will likely remain strong as uncertainty usually fuels demand for the safe-haven metal. XAU/USD dailt chart shows technical indicators have pared losses and turned marginally higher, within neutral or negative levels, limiting the bullish potential in the upcoming sessions. Even further, the pair develops below a bullish 20 Simple Moving Average (SMA), which currently extends its advance above the 38.2% Fibonacci retracement of the June/July rally at $2,411.20, an immediate resistance level. Finally, the longer moving averages keep advancing far below the current price, supporting the long-term bullish stance.
In the near term, XAU/USD is neutral. The 4-hour chart shows a bearish 20 SMA keeps heading south below the current level after crossing below a flat 100 SMA. The 200 SMA, in the meantime, provides dynamic support at around $2,385.00. Finally, technical indicators have bounced from their recent lows but turned flat within neutral levels, somehow suggesting absent buying interest as per XAU/USD holding just below their midlines.
Things have taken a bad turn for the Middle East. Asia, by far the largest demand hub for Saudi Arabia, Iraq or the United Arab Emirates, seems to be going through the same stage of weakness that Europe and the United States were in the spring. Not buying enough, depleting crude inventories and generally expecting flat prices to drop lower before they come back. Perhaps there is no better example of this than China, a country that was supposed to lead summer demand recovery yet ended up buying the least crude this year as its maritime imports dropped to 10 million b/d. Such a general trend of weaker demand and sluggish physical activity inevitably impacted the Middle Eastern futures market, with the Dubai cash-to-futures spread shedding 60 cents per barrel compared to May and averaging only $0.95 per barrel. Seeing that refinery margins have been struggling to move any higher – to be fair they did not decline either – the market was preparing for a substantial price cut for August-loading cargoes across the Middle East.
Chart 1. Saudi Aramco’s Official Selling Prices for Asian Cargoes (vs Oman/Dubai average).
Source: Saudi Aramco.
Saudi Aramco did exactly what was expected. Having already cut formula prices for July cargoes, it lowered Asian OSPs across the board. The lighter Arab Extra Light and Arab Light were slashed by 60 cents per barrel, whilst the heavier grades Arab Medium and Arab Heavy saw an even bigger downward correction, by 70 cents per barrel. With this, Asian formula prices were basically back to May pricing levels, with Arab Light trading at a $1.80 per barrel premium to Oman/Dubai and Arab Medium set $1.25 per barrel higher than the benchmark. The lower pricing was in great measure brought about by very low nominations from term buyers. Total volumes departing for China in June averaged only 1.15 million b/d, the lowest monthly nomination since the first full-impact COVID-19 month of March 2020, whilst India hit a three-year low with a mere 530,000 b/d of June loadings. Even though both countries lifted more in July, the sentiment remained weak and Saudi Aramco needed to react.
Chart 2. Formula prices of Saudi cargoes bound for Northwest Europe by selected grades (vs ICE Brent).
Source: Saudi Aramco.
Compared to Asia which did not really experience notable weakness in buying up until June this year, Europe was already one phase ahead – it saw an all-round collapse of differentials earlier and was rebounding strongly into the summer. Saudi Aramco lifted its Europe-bound August formula prices by a hefty (and uniform) 90 cents per barrel. By not cutting when regional differentials were collapsing and hiking when conditions were ripe, Aramco managed to bring its European OSPs to the highest level since December 2023. Arab Light is at a $4 per barrel premium to ICE Brent, and even Arab Heavy is trading at a premium to the European futures benchmark. That would seem extraordinary in the spring months, but it has gone down well for the summer. In fact, according to market reports all the European term deal holders nominated full monthly amounts for August, suggesting that even despite high prices demand for medium sour crude remains high.
Chart 3. Kuwait Export Blend official selling prices into Asia, compared with Arab Medium and Iranian Heavy (vs Oman/Dubai average).
Source: KPC.
Kuwait doesn’t necessarily share the concerns and qualms of Saudi Arabia, after all the main reason why the country’s exports have been going down so heavily in the past years stems from its own refining. Not only is the 615,000 b/d Al Zour refinery firing on all cylinders, the 230,000 b/d Duqm refinery in Oman that the Kuwaiti state oil company co-operates has reached full production capacity, too. Depending equally on South Korea, China, and Vietnam as its key contractual partners, KPC nevertheless followed Saudi Aramco’s suit and slashed the Asian formula prices for Kuwait Export crude by 70 cents per barrel, taking it to a $1.25 per barrel premium over the Oman/Dubai average. Even the extra light KSLC grade, relatively minor in terms of volumes as KPC has been loading an average of three tankers per month, was cut by 60 cents per barrel vs the July OSP, fully in line with Arab Extra Light.
In the meantime, Kuwait has registered probably one of the largest oil discoveries of past years, claiming that the offshore al-Nokhatha field contains some 2.1 billion barrels of light oil and 5.1 trillion cubic feet of natural gas. As Kuwait has allocated a $300 billion upstream investment budget for its production capacity increases but genuinely lacked any high-impact greenfield project to work on, the field might be a game-changer for the Middle Eastern country’s long-term target of increasing crude production capacity to 4 million b/d.
Chart 4. ADNOC Official Selling Prices for 2017-2024 (set outright, here vs Dubai).
Source: ADNOC.
As has become customary, the national oil company of Abu Dhabi ADNOC is the one to start the price-setting spree in the Middle East and for August (once again), the news weren’t particularly upbeat. They weren’t bad either as the monthly average of Murban traded on the IFAD exchange amounted to $82.52 per barrel, down $1.41 per barrel compared to July’s price. Although Murban is still assessed slightly above Dubai swaps, it is nowhere near as spectacular as it used to be a year or two years ago. The pricing plight of Murban is largely driven by there being significantly more of it in the market as exports of the light sour grades jumped to 1.3-1.4 million b/d since the beginning of this year and have stayed high since. ADNOC’s refinery flexibility project that aimed to send heavier grades into the domestic refining system has finally come to a close, albeit at the expense of Murban’s past premiums. The UAE’s oil champion has also brought Upper Zakum (UZ), the country’s answer to Saudi Arabia’s Arab Light, to parity with Murban after it traded at slight premia to Murban over several months, but seeing weaker demand for UZ in Dubai trades, ADNOC decided to react.
ADNOC is increasingly diversifying its portfolio into gas. In fact, the largest announcement coming out of the Emirates in July was linked to its planned 9.6 mtpa Ruwais LNG export terminal. Western oil majors TotalEnergies, Shell, BP as well as Japan’s Mitsui have all taken 10% equity stakes, with Shell and Mitsui also signing long-term supply agreements. Following ADNOC’s natural gas-focused acquisitions in Mozambique this May and the mulled purchase of Australia’s upstream firm Santos, gas seems to be at the forefront of the UAE’s strategic growth.
Chart 5. Iraqi Official Selling Prices for Asia-bound cargoes (vs Oman/Dubai).
Source: SOMO.
Sticking to its course of mirroring Saudi Aramco’s pricing changes but keeping its grades comparatively cheaper, Iraq has also committed to a cut of 70 cents per barrel for its flagship grade Basrah Medium. For August-loading cargoes, the price will be coming in at a slight discount to Oman/Dubai, just $0.10 per barrel lower than the average of the two benchmarks. In contrast to Saudi Arabia, Iraqi exports weren’t really impacted by lower demand, if anything seaborne flows in May were the highest in five years according to Kpler data, even though since then Iraq has mended its ways and lowered exports to 3.35 million b/d (down about 200,000 b/d month-over-month). As the strength of Dated Brent has preferentially benefited Iraqi formula prices that are linked to the physical benchmark – Saudi Arabia is pricing its barrels based on ICE Brent – the increases carried out by the state oil marketing company SOMO for Europe-bound cargoes were much smaller than Aramco’s. Basrah Medium was hiked by 45 cents per barrel from July to a -$2.40 per barrel discount to Dated, whilst the heavier Basrah Heavy grade saw an uplift of 60 cents per barrel to a -$4.95 per barrel discount.
Chart 6. Iraqi official selling prices in Europe (vs Dated Brent).
Source: SOMO.
Whilst SOMO still sets formula prices for the Kirkuk grade which has historically been sourced from Kurdish-origin production, the deadlock around halted pipeline supplies along the Kirkuk-Ceyhan pipeline remains just as difficult to resolve as it was a year ago. Nevertheless, Kurdish production keeps on increasing with every month, aggravating Baghdad’s woes in meeting its OPEC+ production target. Even though SOMO reports production of 3.83 million b/d in the regions controlled by Baghdad, substantially below the 4 million b/d target, there might be an additional 350,000 b/d produced in Kurdistan. At least half of the Kurdish output is smuggled into the neighboring countries of Turkey and Iran, ultimately making it close to impossible for federal authorities in Iraq to control the rampant trade.
Chart 7. Iranian Official Selling Prices for Asia-bound cargoes (vs Oman/Dubai average).
Source: NIOC.
The election of former health minister Masoud Pezeshkian in the second round of Iran’s presidential elections held on 5 July was hardly a transformative event for the country’s oil industry. There is no discussion of easing sanctions on Tehran – if anything, Donald Trump’s potential re-election would worsen that squeeze – and for as long as Chinese buyers are still buying Iranian crude, Iran will just stick to relying on its key importer. That is not to say Tehran would not seek some form of de-escalation, and the recent release of the Chevron-chartered Advantage Sweet tanker as well as the Iraqi Basrah cargo that was sailing towards Turkey when it was seized by Iran’s navy in January. Iran’s pricing policy remains a largely academic exercise as delivered prices to China are significantly below the formula prices that the country’s state oil firm NIOC publishes, dropping as low as -$7 or -$8 per barrel to Brent futures. Yet in doing so, Iran has remained consistent and followed the line toed by Saudi Aramco. NIOC cut its Asian August formula prices by 50-70 cents per barrel, lowering the nominal value of Iran Light to a $2.10 per barrel premium against the Oman/Dubai average.
JDE Peet’s Jacobs coffee. Credit: Tricky_Shark / Shutterstock.com
Netherlands coffee and tea group JDE Peet’s has raised its full year forecast as it looks to increase pricing amidst ongoing “volatility” in green bean coffee prices.
In its latest half year results, the group raised its total company full year performance from mid-single-digit growth to a forecasted increase in organic adjusted EBIT of “around” 10%.
The coffee roaster and supplier’s organic sales growth is now expected to be in the higher end of its medium range of 3-5%. It was previously in the lower end.
In its half year results for 2024 for the six months ended 30 June, JDE Peet’s posted revenue of €4.2bn ($4.6bn), increasing 3.6% organically year on year and 5.6% on a reported basis. The group booked a profit increase of 86.5% to €360m.
“Given our strong performance in the first half, and our expectations for the remainder of the year – including the ongoing inflation and volatility in green coffee prices, along with the additional pricing that this will require – we are confident in raising our full-year outlook across top-line, profitability and cash flow,” JDE Peet’s interim CEO Luc Vandevelde said.
Robusta coffee bean prices in the second half of JDE Peet’s financial year were up by 54% on the year prior, while Arabica was up 13%.
Access the most comprehensive Company Profiles
on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Company Profile – free
sample
Your download email will arrive shortly
We are confident about the
unique
quality of our Company Profiles. However, we want you to make the most
beneficial
decision for your business, so we offer a free sample that you can download by
submitting the below form
By GlobalData
Speaking to investors on an earnings call last week, Vandevelde explained that the company would look to increase prices to defend its future gross profits.
He said: “The green coffee inflation of the last quarters will hit our P&L [profit and loss] in the coming quarters and thus inevitably [requires] additional price increases and continued cost discipline which I think are essential in protecting our gross profit so we can ensure that we can maintain the right investment levels behind our brands, products, channels, which is crucial for driving growth and shareholder value, both short-term and long-term.”
He added: “The negotiations are actually ongoing right now. We seem to be getting better reception this time around than we did on previous occasions. Actually the first quarter of this year was hit by some retailer retaliation, as we call it, but that levelled out quite nicely in the second quarter.”
A report from GlobalData, Just Drinks’ parent company, showed coffee futures prices surged in March and early April, with cheaper Robusta beans closing as high as $3,700 per tonne and more premium Arabica hitting $2.10 per pound, the highest level in over a year and a half.
Weather condition concerns in the key coffee growing regions of Vietnam and Brazil are driving the surge in prices, alongside the impact of ongoing conflicts in Ukraine and Gaza.
More recent analysis from the data analytics and consulting group suggested that prices stablised in June but are still “at still-high levels”. It said the supply of Arabica beans was in “surplus”, although “another Robusta deficit” looked likely.
In March, JDE Peet’s announced the departure of its 2020 CEO appointment, Fabien Simon. No reasons were given for the change at the top of the business.
Vandevelde was the former Marks and Spencer chairman and CEO and is now a lead independent director at JDE Peet’s. He took over the CEO role on an interim basis while the company looks for a permanent replacement for Simon.
JDE Peet’s has said the search for its CEO successor is still on going. Vandevelde added that the company had brought candidates down to a “very short” list.
“The search and selection process is progressing very well and I do intend to contract my successor before the end of the year,” Vandevelde said.
When asked by an analyst if he was on that short list Vandevelde responded: “I’m really thoroughly enjoying the role of CEO, but I’ve learned in life not to climb the same mountain too many times. So I’ll be very happy to hand over to my successor.”
Sign up for our daily news round-up!
Give your business an edge with our leading industry insights.
