Commodity Tracker: 4 charts to watch this week

1. IEA, OPEC slash 2024 oil demand growth outlooks

What's happening? The International Energy Agency on Sept. 12 cut its 2024 oil demand growth forecast to 910,000 b/d, from a previous estimate of 970,000 b/d, citing China's economic slowdown and shift in modes of transport. This compares with an annual global growth rate of 2.1 million b/d in 2023, according to the IEA. While more bullish than the IEA, the OPEC producer group also cut its estimate of 2024 demand growth to 2 million b/d in its own report the same week. These bearish forecasts come after OPEC decided to postpone a plan to ease production cuts, reflecting concerns about weak oil prices.

What's next? Some loss of momentum is common for oil markets going into the northern hemisphere autumn and winter. On the supply side, political ructions in Libya could offset some of this weakness. However, the IEA estimates OPEC+ spare capacity at 5.7 million b/d, excluding Iran and Russia, suggesting a substantial cushion, and underscoring the challenge ahead for the producer group.

2. Brazilian LNG prices hit new highs versus Europe amid strong demand

What's happening? LNG prices in Brazil have soared to multi-month highs versus benchmark European levels, as the country experiences intense heatwaves and weaker hydropower output. As of Sept.16, S&P Global Commodity Insights data shows that Brazil has imported 280,000 metric tons -- or four cargoes -- of LNG so far in September, reaching the highest since June 2022 to meet domestic power demand. In 2021, during similar scorching temperatures and drought, Brazil imported 133 cargoes of LNG. So far in 2024, the country has imported 28 LNG cargoes, compared to 13 in 2023, 39 in 2022 and 90 cargoes in 2021 during the same period.

What's next? The global LNG market has begun balancing out now that a recent Egyptian tender for 20 cargoes has been awarded and amid high European gas inventories. Additionally, Brazil has gas supply from neighboring countries such as Bolivia which should help to supplement demand needs. However, traders are expecting Brazil to procure more LNG volumes this winter as they potentially battle hotter temperatures and lower hydro levels.

3. Russian wheat market sees 14.5% drop since June, exports steady

What's happening? Russian wheat is in demand amid low prices and reduced exports from the EU. Russia's low prices have helped maintain steady export volumes at a time when Turkey, a top customer for Russian wheat, suspended its wheat imports June 15-Oct.15 to protect local production. Simultaneously, exports of EU wheat have decreased year on year as top producers France and Germany grappled with rainfall since May. The price of FOB Russian wheat with 12.5% protein content has not exceeded $223 per metric ton since July 3, reflecting a 14.5% decline since June, according to Commodity Insights data. As of Sept. 16, Platts assessed FOB Russian wheat at $217/t, a drop from $244.50/t at the same time in 2023.

What's next? As the wheat harvest progresses in Russia, traders are watching the heavy rainfall in the country could lead to crop quality deterioration and low wheat test weights. Novosibirsk is the latest district in Siberia to have declared an emergency due to the rain. As of Sept. 11, 72 million metric tons of wheat has been threshed.

4. NZU emitter demand may rise amid 3-year high electricity emissions in Q2

What's happening? New Zealand's greenhouse emissions from electricity generation climbed to 1.431 million metric tons of CO2 equivalent in the second quarter, marking over a three-year high, a report by country's Ministry of Business Innovation & Employment. The emissions were last higher in June 2021 at 1.866 MMtCO2e. Additional coal and gas were needed to generate enough power amid low hydro lake levels. The emissions from coal-based electricity generators in Q2 saw an increase of 264% quarter on quarter, with a jump in emissions from 212,470 MMtCO2e to 773,600 MMtCO2e.

What's next? The Q2 emissions equate to around 1.4 million NZU and could lead to higher demand for the units from the emitters, sources said, adding that the emitters may or may not have a stockpile big enough to meet the spike in emissions. Emitters under the NZ Emissions Trading Scheme are required to purchase and surrender one NZU for every ton of CO2e emissions they produce.

Reporting and analysis by Nick Coleman, Aly Blakeway, Sakshi Jalan, Vivian Iroanya, Himanshu Chauhan