Data from the Vietnam Commodity Exchange (MXV) shows that global raw material markets continued to show mixed trends on March 18th. The green color continued to dominate, with the MXV-Index rising 0.66% to 2,225 points, extending the winning streak to six consecutive days. The total trading value on the exchange was over 5.7 trillion VND.

Oil Prices Rise 2% Due to Geopolitical Risk Concerns

According to MXV, at the end of the first trading day of the week, all five energy commodities saw price increases. Notably, oil prices rose about 2% to their highest level in four months due to concerns about geopolitical risks. Additionally, tighter supply signals and stronger demand also supported the price increase.

By the close of trading, WTI crude oil had risen 1.94% to $82.14 per barrel, marking the highest closing price since October 27. Brent crude oil increased 1.82% to $86.89 per barrel.

Over the weekend, Ukraine continued to intensify military activities targeting Russian energy infrastructure, causing significant damage to several refineries deep within Russian territory. Gunvor Group CEO Torbjörn Törnqvist estimated that approximately 600,000 barrels of Russia’s daily refining capacity had been impacted by Ukrainian drone attacks.

On the supply side, Iraq's Ministry of Oil announced that the second-largest producer in the Organization of the Petroleum Exporting Countries (OPEC) would reduce crude oil exports to 3.3 million barrels per day in the coming months to offset the overproduction exceeding the OPEC+ quota since January. Previously, Iraq had significantly overproduced in January and February, averaging around 4.2 million barrels per day compared to the target of 4 million barrels per day.

Meanwhile, data from the Joint Organizations Data Initiative (JODI) showed that Saudi Arabia’s crude oil exports fell for the second consecutive month in January, decreasing 0.2% to 6.297 million barrels per day. The narrowing supply from two leading OPEC producers has bolstered buying pressure in the oil market.

On the demand side, data from China's National Bureau of Statistics (NBS) indicated that China’s refining throughput in the first two months of 2024 reached 118.76 million tons, equivalent to 14.45 million barrels per day, up 3% year-over-year. Strong demand for transportation fuels during the Lunar New Year holiday has led refineries to increase their operations.

Morgan Stanley's optimistic oil price outlook also supported positive market sentiment. Specifically, the bank raised its Brent crude oil price forecast by $10 per barrel to $90 per barrel in Q3, citing tighter supply-demand dynamics with OPEC+ commitments and Russia's oil production cuts following recent drone attacks on its refineries. For Q4, Morgan Stanley expects oil prices to reach $85 per barrel, up from the previous estimate of $80 per barrel.

Robusta Coffee Prices Continue to Rise Due to Supply Shortages

At the close of trading yesterday, the green color also dominated on the industrial raw materials price board. Coffee markets showed mixed trends. Arabica prices fell 0.66%, while Robusta prices increased by 1.06% from the reference. The risk of supply shortages in the market was the main factor supporting buying pressure on Robusta.

Forecasts of prolonged dry and hot weather across Vietnam's key coffee-growing regions have raised concerns about the prospects for the new crop in the world's largest Robusta exporter.

For Arabica, improving certified stocks have created a positive supply outlook in the market. As of March 14, the total certified Arabica coffee has increased by 20,853 bags, raising the total storage to 488,678 bags.

Additionally, the Dollar Index rose 0.13% while the Brazilian Real weakened, causing the USD/BRL exchange rate to increase by 0.68%. The widening gap between the two currencies stimulated Brazilian farmers to sell coffee, which further supported the current supply situation in the market.

In other developments on the industrial raw materials price board, cotton prices rose 0.67% as the market continued to react to positive cotton sales in the U.S. In the export report for the week ending March 7, the U.S. sold 85,800 bales of cotton, up 65% from the previous week. The country also exported 217,700 bales of cotton, up 4% from the 4-week average. This reflects improving demand for U.S. cotton in the international market.

However, the strengthening Dollar Index in the evening session somewhat dampened price gains. The stronger U.S. dollar made American cotton more expensive for buyers holding other currencies, limiting buying pressure in the market.

Sugar prices edged up 0.18% compared to the reference level. Mixed information on sugar production in major producing countries created a tight trading session. According to Fitch Solutions, the reduction in sugarcane planting areas in major Indian states, combined with expected lower production in central and southern Brazil for the 2024/25 season, is driving price recovery. However, this contradicts the previous forecast by the Indian Sugar Organization for a recovery in Indian sugar production.

Source: MXV