Commodity wrap - Oil, Natgas, Platinum, Cocoa (22.07.2025)

Oil

• Iraq has agreed to allow oil shipments through the autonomous Kurdistan region in the north of the country. Kurdistan is expected to supply approximately 230,000-250,000 barrels per day (bpd) of oil via pipeline to Turkey, with the entire operation to be overseen by the Iraqi Ministry of Oil.

• Concurrently, Turkey has indicated that the agreement concerning the use of the pipeline for oil exports from northern Iraq is set to expire in 2026. Previously, up to 500,000 bpd from the Kurdish region flowed into Turkey.

• Nevertheless, it is important to note that no oil has been exported through this pipeline for the past two years.

• An increase in exports by Iraq may elicit a response from other countries, notably Saudi Arabia, which is keen to maintain its market share.

• The European Union has approved another package of sanctions against Russia. Around 20 financial institutions are to be banned from using the international SWIFT payment system, while additional vessels from the 'shadow fleet' are to be sanctioned. The number of sanctioned vessels is expected to exceed 400 units.

• The sanction package includes lowering the price cap for the Russian crude oil to $47.60 per barrel from the current price cap of $60 per barrel 

• OPEC+ plans another production increase of 550,000 bpd in September, which will conclude the voluntary production cuts of 2.2 million bpd that have been gradually reduced since April of this year.

• OPEC+ simultaneously announced that the production increases are set to conclude from October.

• According to the IEA, an oversupply persists in the market, even amidst current high demand, which is keeping prices relatively elevated. The IEA projects that the oversupply will average 1 million bpd by year-end.

US crude oil inventories remain near a five-year low. It is worth noting that inventories are stabilising at a time when seasonality suggests clear declines. This is most likely linked to the ongoing market oversupply. Even seasonally heightened demand is unable to absorb the additional quantities of crude oil. Source: Bloomberg Finance LP, XTB

Comparative inventories have recently begun to rise, no longer justifying high crude oil prices. Source: Bloomberg Finance LP, XTB

The crack spread in the US indicates that fuel demand remains very high. Source: Bloomberg Finance LP, XTB

Natural Gas

• Natural gas prices have remained under pressure since the start of the fourth week of July due to stable gas deliveries to storage facilities, even despite weather patterns that would typically suggest greater demand.

• Prices have already fallen by almost 10% compared to last week's peaks. Today's session will see the rollover of futures contracts.

• Seasonality suggests that the market should be in an upward trend, though a local trough around July 27-28 cannot be ruled out.

• Last week, US natural gas production rose to its highest level on record, while gas demand returned to its five-year average.

• Concerns regarding inventory replenishment in Europe have eased following the redirection of some supplies from Asia. This was made possible by limited demand in the Asian market.

US natural gas production has surged to new historical highs. Furthermore, since the beginning of this year, we have observed a clear increase in drilling rigs, which may indicate the prospect of further production growth or sustained levels above 100 bcf/d. Source: Bloomberg Finance LP, XTB

Seasonality points to an upward trend in the coming weeks. Source: Bloomberg Finance LP, XTB

Natural gas prices have fallen by almost 10% compared to last week's close. Key price support lies around $3.15-$3.20. Source: xStation5

Platinum

• Platinum is currently the leading performer in the commodities market in 2025, with a gain exceeding 60%, approximately twice the movement seen in gold.

• Recent years have seen a significant deficit in the platinum market, leading to a lack of investment in new mines.

• However, platinum is an easily recoverable metal, and rising prices could therefore incentivise greater recycling efforts.

• The price increase is primarily driven by a substantial surge in jewellery demand, as platinum in China is perceived as "gold for the slightly less affluent."

• Concurrently, the latest WPIC forecasts indicate a decline in investment demand in 2025, following strong growth in 2024.

• Interestingly, we have recently observed a clear decline in the amount of platinum held in ETFs. This could be linked to profit-taking by some investors. It is worth noting that platinum ETFs are very small compared to gold or even silver ETFs.

• The average acquisition cost of platinum in ETFs was estimated at $1,100 per ounce in 2024 and early 2025. Exceeding this level may have led investors to exit this uncertain market.

• Market sentiment also suggests that ETFs themselves could be a source of supply in the market, and many investors may view this form of investment not for profit, but as a source of supply, given the persistent global deficit for years.

Platinum is currently the top-performing commodity in terms of return. Source: Bloomberg Finance LP

WPIC forecasts indicate that a market deficit will persist at least until 2028. By 2028, all above-ground inventories are expected to be consumed. Source: WPIC

An interesting situation is unfolding in terms of investment demand. Platinum prices are rising sharply, while the entire increase in demand from ETFs this year has been neutralised in recent days. Source: Bloomberg Finance LP

Cocoa

• Demand data from Europe, Asia, and North America showed clear declines in the second quarter of this year.

• The largest processing declines were observed in Asia, where cocoa bean grinding fell by as much as 16.3% year-on-year, reaching its lowest level since 2017.

• The drop in demand is a consequence of excessively high prices, which are deterring processors.

• Consumers themselves are also reducing purchases of chocolate products, as evidenced by the results and guidance from major companies such as Barry Callebaut, Nestlé, and Lindt.

• Prices fell to their lowest level since November 2024 in response to the latest processing data. However, cocoa prices have since seen an upward correction and are once again above $8,000 per tonne.

• Weather conditions in Africa remain favourable for cocoa trees, which bodes well for the upcoming 2025/2026 season, commencing in October.

• The weather is particularly good in Côte d'Ivoire and slightly less favourable in Ghana and Cameroon.

• Cocoa deliveries to ports in Côte d'Ivoire for the current season stand at 1.74 million tonnes, compared to 1.64 million tonnes during the same period last year.

Long-term averages suggest that an increase in cocoa prices should already be underway. The absence of a significant rise may indicate excessive supply or limited demand. However, it is worth noting that last year, price increases began in August and September. Source: Bloomberg Finance LP, XTB

Cocoa prices are undergoing a clear upward correction, similar to what was observed in May and June. The scope of the correction potentially suggests a rise towards $8,350 per tonne, around the upper boundary of the descending trend channel. Source: xStation5