Indian sugar export may fall, heightened geopolitical tension leads to increase in crude oil prices, Crude oil demand to drop

11th May - 17th May

India to export less than the target of 5 million tonnes of sugar this year

May 14, 2019

India's sugar exports will remain short of its allocated quantity this year. Sugar mills in India have achieved 2.8 million tonnes of the sweetener exports so far this season. Having an opening balance of 10.7 million tonnes as on October 1, 2018, and estimated the production of 33 million tonnes as against domestic consumption of 26 million tonnes and 3.5 million tonnes of exports, the estimated carryover stock for the next season i.e. 2019-20 (October – September) would be 14.2 million tonnes.

Source: Business Standard

Indian cotton export affected by the slide in American cotton prices

May 14, 2019

US and China tariff issues have created uncertainty in the Indian cotton market.  International cotton prices have been slipped by over 16 percent over the past month, which is affecting Indian cotton importers. So far about 18 lakh bales of cotton import contracts have been made of which shipments for over 7 lakh bales has already arrived and Import contracts for the remaining 11 lakh bales were entered into at a very high rate.  Indian cotton importers have anticipated the loss and are looking to re-work on the import contracts.

Source: Business line

Mounting tensions in the Middle East hitting global supplies

May 15, 2019

Oil prices remain firm after Saudi Arabia reported that armed drones struck two oil pumping stations, two days after the sabotage of oil tankers near the United Arab Emirates. The attacks took place against the backdrop of U.S.-Iranian tension. 

Source: Reuters

Crude oil demand to drop by 90000 bpd to 1.3 million bpd: EIA

May 15, 2019

According to EIA report, Oil demand for the year 2018 revised to downgrade by 70,000 barrels per day (bpd) summing to 1.2 million bpd, while the forecast for the year 2019 is cut by 90,000 bpd to 1.3 million bpd. US-China tariff war is the key reason behind slowdown in the global economy and is the main reason projected that lead to the drop in demand.

Source: Bloomberg

OPEC production cut to balance demand and supply

May 14, 2019

OPEC said that production cut will balance the supply and demand outlook this year if OPEC group refrains from raising output. OPEC, Russia and other non-member producers are reducing output by 1.2 million barrels per day from Jan. 1 for six months. Next OPEC meeting is scheduled on June 25-26 to decide whether to extend the pact.

Source: CNBC

A buyer’s bloc to bargain crude oil purchases

May 15, 2019

India and China are set to roll out a buyers’ bloc to bargain.US sanctions on Iran threaten to inflate oil bills and India and China are most affected by this step. China and India have been top buyers of Iranian oil. China imports nearly 628,000 bpd and India 357,000 bpd from Iran. India is also trying to stitch a wider alliance with Japan and South Korea for a better bargain.

Source: Live mint

Tariff war may lead the US Fed to cut interest rates

May 13, 2019

The Federal Reserve will be more inclined to cut interest rates to control inflation after US-China tariff escalated with increased tariff. President Donald Trump has followed on his threat to increase tariffs on US imports from China. China has also imposed the tariff on US goods. Equity markets slumped this week as investors’ hopes for a dimmed trade deal.

Source: Economic Times

Geopolitical issues and Central banks buying may support gold at lower levels

May 12, 2019

Gold has witnessed a sharp correction in the last two and a half months, but increasing geopolitical tension and gold buying by central banks may lend support to gold. As per WGC report net buying by central banks reached 145.5 tonnes (i.e. 68% higher than the previous year) in the first quarter of 2019. It was the highest quantity bought by central banks in the first quarter since 2013.

Source: Economic Times