Commodity Tracker: 5 charts to watch this week

1. OPEC+ cuts crude output, relieving some pressure on overproducers

What's happening? OPEC+ produced 40.23 million b/d of crude in September, 500,000 b/d less than in August, the Platts OPEC+ survey from S&P Global Commodity Insights showed Oct. 10. Production fell due to a major shutdown in Libya and cuts to exports, refinery runs and direct burn in Iraq. OPEC+ members with quotas pumped 232,000 b/d above their collective target in September, down almost 100,000 b/d from overproduction of 327,000 b/d in August. The cut comes as an escalation in tension in the Middle East is boosting oil prices.

What's next? OPEC+ currently plans to gradually bring 2.2 million b/d of voluntary production cuts back to market from December, but it has already delayed this plan once and could make further changes. In addition to quota compliance, it is grappling with downward price pressure from growing non-OPEC+ output, and weak demand forecasts. The next meeting of the Joint Ministerial Monitoring Committee, which oversees the agreement, and a full OPEC+ ministerial meeting is scheduled for Dec. 1 in Vienna. The group can call extraordinary meetings if it considers market conditions require discussion of policy changes.

2. Libyan oil output rebounds after political resolution

What's happening? A month-long oil shutdown by Libya's eastern faction ended after the appointment of new central bank governor Naji Essa on Oct. 3. The closure of oilfields and ports from Aug. 26 followed efforts by the western government in Tripoli to replace former governor Siddiq al-Kabir. Libyan output fell to 580,000 b/d in September, according to the Platts OPEC+ Survey, well below July's 1.15 million b/d. Force majeure has now been lifted key El-Feel and Sharara fields, but this shows how political feuds can impact output.

What's next? Following the shutdown, Libyan oil production is roaring back, surpassing pre-crisis levels, thanks to new drilling and maintenance during the shutdown, sources said. The NOC said Libya pumped 1.25 million b/d on Oct. 11. While the crisis supported differentials of Med-bound crudes, they are now weakening following the resolution, with one trader saying Europe is "inundated with Libyan cargoes."

3. Asian iron ore market braces for extended supply glut amidst weak demand

What's happening? Changes in the Chinese national standards for rebars have seen poor overall margins in Q3, leading to subdued demand over concerns of production cuts among domestic mills. Platts-assessed benchmark 62% Fe Iron Ore Index increased to $108.30/dry mt CFR North China Sept. 30, up 6.4% on the day, to the highest level seen since July 2022. The price jump came after a week it which it fell to a near two-year low. In steel markets, the Platts-assessed domestic rebar spot prices posted a 10% rise on the day to Yuan 3,800/metric ton ($542/t).

What's next? Market participants are currently adopting a wait and see stance, with many still procuring on a need-only basis as uncertainty looms over how long the price momentum for seaborne iron ore prices can last. The market needs a pickup in steel demand to ensure consistent iron ore consumption levels.

4. Indian parboiled milled rice 5% price hits 10-month low ahead of new crop arrival

What's happening? Indian parboiled milled rice 5% STX price fell to a 10-month low Oct. 8, with Platts assessing it at $489/t FOB. The price is down 3% on the year due to the reduction in export duty on parboiled rice and new crop arrival pressure, Commodity Insights data showed. Indian PB 5% remains competitive among other origins despite a 10% export duty and is likely to attract more international demand from price-sensitive West African destination markets.

What's next? Sources anticipate PB 5% prices to soften further as the 2024 kharif harvest enters the market after mid-October. Kharif and rabi are the two main crop seasons in the Indian subcontinent. Kharif, also known as monsoon crops, are sown at the beginning of the rainy season, usually from July to October. Rabi, also known as winter crops, are sown after the monsoon has ended, usually from October to April. With the 2024 kharif crop expected to be a bumper harvest, India is forecast to export 20.5 MMt rice in marketing year 2024-25 (October-September), up 37% on the year, Commodity Insights data showed.

5. India looks to tap Brazil in push toward crude diversification, equity oil

What's happening? Exports of Brazilian crude to India have been subdued in recent months. So far in 2024, India has imported crude from Brazil during just five months, with imports this year peaking at 41,600 b/d in April, data from S&P Global Commodities at Sea showed. In December 2023, Indian imports of Brazilian crude were as high as 143,000 b/d. It currently costs about $4-$6/mt and takes about a week to ship crude oil from some destinations in the Middle East, while it costs $15-$20/mt and takes about a month to bring in crude oil from Brazil. India has intensified efforts to expand crude oil purchases from Brazil amid escalating Middle East tensions. Indian petroleum minister Hardeep Singh Puri recently visited Brazil to discuss how India could expand crude oil purchases from Brazil, as well as look for opportunities to collaborate on offshore deep and ultra-deepwater exploration and production projects.

What's next? Analysts and sources are of the view that plentiful availability of discounted Russian crude and logistical hurdles could pose challenges in boosting India's purchases from Brazil. In addition, India could face more competition from China for Brazilian crude as China faces difficulty in sourcing Iranian crude and starts looking for alternatives.

Reporting and analysis by Rosemary Griffin, Charlie Mitchell, Kyla Koh, Namarita Kathait, Sambit Mohanty