Commodity Tracker: 4 charts to watch this week

In oil, OPEC+ agreed to extend the bloc's voluntary crude production cuts before gradually bringing barrels back to the market. In other news, container rates increase amid Asian port congestions. Additionally, S&P Global Commodity Insights editors are focusing on US battery storage capacity and African LNG exports.

1. OPEC+ agrees to scale back voluntary crude output cuts in Q4

What's happening? OPEC+ ministers agreed a deal June 2 to extend their 2.2 million b/d voluntary crude production cuts through the third quarter, before gradually bringing barrels back to market from October. The group also extended a set of cuts totaling some 3.7 million b/d that had been phased in since October 2022 by a year -- until the end of 2025. The UAE secured a quota increase of 300,000 b/d, to be phased in over the first nine months of 2025. The extensions come at a time when crude prices are hovering around $80/b. Platts, part of S&P Global Commodity Insights, assessed Dated Brent at $76.77/b on June 3, down from a 2024 peak of more than $93/b in early April.

What's next? OPEC+ watchers will closely follow quota compliance, demand growth and non-OPEC+ supply through the second half. The Joint Ministerial Monitoring Committee overseeing the deal is next scheduled to meet Aug. 1, with a full ministerial meeting slated for Dec.1. Three countries that overproduced in early 2024 have until the end of June to submit compensation plans.

2. Lack of container equipment, port delays lead to fresh container freight peaks

What's happening? Container rates ex-Asia observe 20-month highs amid port congestions and shortage in container equipment, as rerouted ships around the Cape of Good Hope continue to impact market dynamics. Westbound North -- North Europe Cargo soared to $6,200/FEU as Platts Container Rate 1 (PCR100) assessed at a rate level last seen Sept. 20, 2021. Meanwhile, US container import spot rates from both North Asia and Southeast Asia also reached their highest levels in nearly two years -- cargoes into West Coast North America (PC1300) were assessed at $6,100/FEU and reached $7,200/FEU into the East Coast, PCR0500.

What's next? Bullish sentiment prevails as an early peak season in container markets continues to drive carrier general rate increases, with several liner companies announcing premium freight rates. As geopolitical tensions remain high in the Middle East, most market participants anticipate the Red Sea diversions will continue up until the end of the year and could challenge markets in the foreseeable future.

3. US battery storage capacity climbs to nearly 20 GW in Q1, 6.9 GW planned in Q2

What's happening? Total US battery storage capacity climbed 84% year on year(opens in a new tab) to reach 19.799 GW by the end of the first quarter, according to Commodity Insights compilation of various government filings. The California Independent System Operator leads with 42.8% of total US capacity, with the Electric Reliability Council of Texas catching up. The US Energy Information Administration expects 27 GW to come online by end-2028 in ERCOT and the Western Electricity Coordinating Council, with ERCOT accounting for a little over half.

What's next? There is 6.9 GW of capacity scheduled to be added in Q2. Battery storage installations could continue to grow if recent price stabilization continues, allowing for more predictable battery production costs. Platts assessed lithium carbonate CIF North Asia mostly between $13,500/mt and $14,500/mt since Jan. 30, following two years of volatility.

4. African LNG exports plummet to lowest level in nearly two years

What's happening? African LNG exports hit their lowest level(opens in a new tab) since August 2022, raising concerns about the seasonal demand for LNG. Total exports from African countries amounted to 2.91 million mt in May, falling 10% month on month, according to Commodity Insights data. Nigeria was the region's top LNG exporter in May with 1.12 million mt, up 6% on the month, while most countries saw a decrease in outflows. Europe remained the top destination for African LNG exports, attracting 1.35 million mt in May. The Asian market followed with 1 million mt. India emerged as the top importer, driven by hot weather across South Asia.

What's next? Indian demand for African LNG is expected to cool down in July due to ample inventory levels and the monsoon season. On the other hand, trade sources said buying interest has emerged in the week starting June 3 in Southeast Asia in preparation for summer. In Egypt, a floating storage and regasification unit with a capacity of 750 MMcf/d is expected to be secured in the Ain Sokhna port.

Reporting and analysis by Rosemary Griffin, Mohammed Al-Ansare, Kassia Micek, Clio Ho