Commodities Market Review: Brent Crude Oil Climbs To New 3 Year High

Crude Oil Market

ICE_B1, a benchmark for brent crude oils, had one of the highest returns of the commodities package with increases of 6.97% over the one month period from April 22 to May 22, 2018. One can reasonably suppose that geopolitical concerns led to this increase as crude oil hit some its highest prices since November 2014. President Trump’s decision to pull out of the Iran nuclear deal has impacted prices as Iran produces 4% of the world’s oil supplies. The last time sanctions were imposed on Iran, their production fell immensely. Saudi Arabia has said it will attempt to fill in any supply gap left by sanction on Iran.

Crude oil pipes in Texas (Source: Wikimedia Commons)

At the same time, OPEC, particularly Saudi Arabia and Russia, have been leading months of supply cuts in order to drive up prices of oil. OPEC and Russia produce over 40% of the world’s oil. These cuts are due to expire at the end of 2018 and members are expected to meet prior to that to decide whether they will continue.

Finally, Venezuela has had many economic and political struggles which are greatly decreasing its oil output at rates faster than expected. Some of the countries biggest oil producers are struggling as workers have left because of low wages and poor working conditions. Many of Venezuela’s oil field are aging and become more dangerous places to work in. The combination of lowering supplies from Iran, OPEC, and Venezuela are driving up brent crude oil prices.

This commodities forecast was first sent to current I Know First Subscribers on April 22, 2018.

Natural Gas Market

Over the 3 day trading period from May 13 to May 17, 2018, ^XNG, a natural gas index, produced the highest returns. Natural gas inventories are subject to seasonal trends depending on how cold winters are. Following a colder than usual winter in the Northeast this year, demand for natural gases was extremely high and inventory is still below where it was at this time last year.

This commodities forecast was first sent to current I Know First Subscribers on May 13, 2018.

How to interpret this diagram

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