Decreased forecasts of future oil consumption are increasing pressure on crude prices. This year’s Atlantic hurricane season produced fewer storms than 2023, but the toll from the five that made landfall in the US will go down as some of the most destructive in recent memory. The future of orange juice remains high.
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(Bloomberg) — Diminishing forecasts for future oil consumption are adding pressure to crude prices. This year’s Atlantic hurricane season has spun out fewer storms than 2023, but the toll from five that made landfall in the US will go down as some of the most destructive in recent memory. Orange juice futures are lingering at elevated levels.
Here are five notable charts to consider in global commodity markets as the week gets underway.
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Oil
Forecasts for oil consumption next year from the three main forecasting groups have changed since July, mainly driven by weakness in China. Those limited ratings added a dark layer over the market that helped mask ongoing turmoil in the Middle East. The International Energy Agency continued this trend last week, cutting its forecast further, as it predicted a steady supply next year contributing to a sharp drop in crude this week.
Storms
This year’s Atlantic hurricane season has 15 named storms so far, thanks to the arrival of Tropical Storm Nadine and Hurricane Oscar over the weekend. That’s close to an average year, though the numbers can be deceiving: With five hurricanes hitting the continental US — including Helene and Milton that hit two weeks apart and devastating areas in the South — they could leave 2024 as one of the costliest hurricane seasons. The true extent of the damage may take months to fully assess, but for context Katrina in 2005 caused $200 billion in inflation-adjusted damages and Harvey in 2017 racked up $160 billion.
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Orange juice
Orange juice prices are down about 50% this year as drought and disease undermine output from Brazil, the world’s largest juice supplier, while Florida’s orange trees continue to decline. Futures hit new records last month, and Hurricane Milton drove prices higher after the storm cut down fruit and trees in a top juice-producing US state. The US Department of Agriculture already expects Florida’s production this season to be the lowest since 1933 – but adding in the impact of Milton could result in an even bigger harvest.
Iron Steel
The world’s two largest steel suppliers, Rio Tinto Group and Vale SA, increased production of the steelmaking ingredient in the third quarter, even as demand from China faces tough conditions due to the country’s unresolved crisis. Rio’s quarterly production rose from earlier this year, while Brazil’s Vale produced its highest volume since late 2018, before the dam collapse disaster caused years of disruption. The world’s leading iron ore miners continue to strengthen resources, and their largest operations are protected by costs per ton that remain well below current levels.
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Electricity
The world is heading for an era of cheaper electricity prices as the shift to electricity leaves a surplus of oil and gas, the International Energy Agency has predicted. Electricity consumption has grown twice as fast as total energy demand over the past decade, and is expected to outpace global demand for all fossil fuels, the IEA forecast in its annual long-term report. The agency expects global electricity production to nearly double by 2050, with China leading growth in the Asia Pacific.
—With assistance from Brian K. Sullivan, Ilena Peng, Mariana Durao, Doug Alexander and Kevin Orland.
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