Commodity Wrap - Oil, Natgas, Gold, Coffee (24.06.2025)

Oil

• Price Surge: Oil prices surged at the open of the final week of June, driven by a significant escalation in the Middle East.
• US-Iran Tensions: The United States conducted a bombing raid on nuclear infrastructure in Iran, which was subsequently met with a threat to blockade the Strait of Hormuz. No concrete actions were taken in this regard.
• Iranian Retaliation: Iran retaliated with an attack on US military bases in Qatar and Iraq, though this proved ineffective.
• Fragile Ceasefire: A ceasefire agreement was ultimately reached, though it remains very fragile. Despite indications of a breach, President Trump stated Israel would not launch an airstrike on Iran, and the ceasefire remains in place.
• Strait of Hormuz Risk: A key regional risk factor was the potential blocking of the Strait of Hormuz. While difficult to achieve through a physical blockade, it remains possible via direct attacks on tankers. In the past, Iran has been accused of deploying underwater mines.
• Crucial Trade Route: The Strait of Hormuz accounts for the flow of approximately 20 million barrels per day (bpd) of crude oil and other products, primarily from Saudi Arabia, the United Arab Emirates, Iraq, and Kuwait. It also handles around 20% of global LNG exports, mainly from Qatar and the UAE.
• Supply Impact: Theoretically, about 6-7 million bpd could be rerouted to other ports in Saudi Arabia and the UAE. Nevertheless, even a temporary disruption of a dozen percentage points of global supply could lead to a sharp price increase.
• Asian Demand: The largest recipients of energy commodities from the region are Asian countries, primarily China, India, Pakistan, Japan, and South Korea.
• Solid Fundamentals: However, the fundamentals in the oil market remain solid in the short term. US crude oil inventories have significantly declined despite a global oversupply.

US crude oil inventories have fallen to near a five-year low. Source: Bloomberg Finance LP, XTB

Inventories of all petroleum products have also sharply decreased and remain below the five-year average and last year's levels. Source: Bloomberg Finance LP, XTB

Comparative inventories have notably fallen, justifying relatively high oil prices. Currently, however, these prices are significantly lower than at the end of last week, which may suggest a slight undervaluation. Source: Bloomberg Finance LP, XTB

Oil recently generated an oversold signal, represented by a two-standard-deviation deviation from the one-year average. Currently, oil is inexpensive, but not extremely cheap. Source: Bloomberg Finance LP, XTB

Natural Gas

• Price Decline: Natural gas prices have distinctly fallen over the past three sessions, just ahead of futures contract rollovers.
• Flat Curve: Currently, the curve is essentially flat until October, sitting in a slight contango with a range of merely 12 cents.
• Temperature Expectations: The price decline was linked to expectations of falling temperatures. Nevertheless, the 6-10 day outlook still indicates significantly higher than normal temperatures across most states.
• Demand Trends: The latest demand data suggests that gas consumption is higher than usual, which may indicate that inventory growth from this point will be minimal.
• Inventory Growth: However, at present, we observe a clear increase in inventories above the five-year average. Additionally, we are seeing a decline in exports compared to the first months of this year.
• Hormuz and LNG: It is worth noting that a substantial number of LNG carriers also transit the Strait of Hormuz. Qatar and the United Arab Emirates are among the world's largest LNG exporters.
• Ceasefire Impact on Gas: The initial rise in TTF gas prices was notably neutralized after the ceasefire agreement was reached.
• European Supply Concerns: Consistent global gas supplies are crucial for Europe, considering the significantly lower storage fill levels than last year and compared to the five-year average. Currently, storage facilities are approximately 55% full.

LNG prices rose significantly, but in Europe, we observe a clear decline in response to the resolution of the situation. It is worth noting that currently, the main suppliers of LNG to Europe are not Persian Gulf countries, but rather the United States, African countries, and also Russia. Source: Bloomberg Finance LP, XTB

Comparative inventories have rebounded sharply in recent months. Nevertheless, it is not excluded that excessive demand will reverse this trend. Source: Bloomberg Finance LP, XTB

Gas demand is at its highest levels in a five-year range, while production is much lower than it was just a few weeks ago. Source: Bloomberg Finance LP, XTB

Demand is clearly recovering and is almost equal to supply. Theoretically, we should observe the peak of summer consumption in the near future, which should lead to a return of upward price pressure on gas. Source: Bloomberg Finance LP, XTB

As seen, the 5, 10-year, and long-term averages indicate that a local trough should be established in the near future. Gas prices typically gain during the summer period. Source: Bloomberg Finance LP, XTB

Temperatures in the US at the turn of June and July are expected to be significantly higher than normal. Source: NOAA

Gold

• Current Correction: Gold is currently undergoing its largest correction since May, having first breached the 25-period moving average and now testing the 50-period average.

• Fed Rate Outlook: The Federal Reserve indicates that it may now wait several months before cutting interest rates, although Fed's Michelle Bowman suggests she sees a possibility of a cut in July.
• Trump's Stance: Donald Trump states that interest rates are significantly too high and urges the Fed to cut them.
• Increased Allocation: ETF funds and futures market investors perceive market risk and are increasing their allocation to gold.
• Falling COMEX Inventories: Simultaneously, however, we are observing a clear decline in COMEX inventories.
• Seasonal Consolidation: Gold is currently very close to the end of its seasonal consolidation.

ETF funds currently hold the most gold since late 2023, having bought for eight consecutive days. Source: Bloomberg Finance LP, XTB

Speculative investors are increasing long positions not only in the US but also in China. Source: Bloomberg Finance LP, XTB

Gold inventories on COMEX are falling, which may indicate a reduced risk assessment by investors. Source: Bloomberg Finance LP, XTB

Gold is potentially approaching the end of its seasonal consolidation. Source: Bloomberg Finance LP, XTB

Gold is testing the 50-period moving average, which has remained a key support since the beginning of this year. In addition to this average, it is worth noting the support at the 23.6% Fibonacci retracement and the $3300 per ounce level. Source: xStation5

Coffee

• Continued Retreat: Coffee prices continue their pullback, despite Monday's rebound linked to uncertainty surrounding harvest prospects.

• Brazilian Frost Concerns: This time, harvest concerns are related to frosts in Brazil, which, since 2021, initiated the current uptrend in coffee and led to a permanent reduction in the country's production outlook.
• Temperature Sensitivity: Coffee is highly susceptible to temperature fluctuations. Frosts during the tree flowering period are the worst weather phenomenon for coffee.
• Harvest Season: However, the high season for coffee harvesting in Brazil is currently underway and will continue through July and August.
• Robusta Outlook: Nonetheless, coffee prices are falling mainly due to improved Robusta harvest prospects, primarily in Asia.

Robusta prices have neutralized most of their gains since the beginning of 2024. Source: Bloomberg Finance LP, XTB

Seasonal declines in coffee typically last until the end of July, which is associated with the high harvest season. Afterward, however, we usually observe increases. The largest gains occur from November, after the end of the delivery season, which runs from August to October. Source: Bloomberg Finance LP

Recently, there has been a significant reduction in long positions on coffee. Source: Bloomberg Finance LP