Five Key Charts to Watch in Global Commodity Markets This Week -

OPEC+ has opted to delay the restoration of oil supply until April, prompting options traders to voice their most pessimistic sentiments in months. The focus now shifts to soybeans as the US Department of Agriculture is set to unveil its latest supply-and-demand estimates this Tuesday. Meanwhile, the US natural gas “widowmaker” strategy has taken a new turn, suggesting initial oversupply predictions for the end of the winter season may need reevaluation.

Here are five key charts to consider in the global commodity markets as the week kicks off.

Oil

Options traders show a notable bearish outlook for Brent crude as OPEC+ nations have once again chosen to postpone the resumption of oil production that was halted since 2022. This delay appears set to only alleviate price declines during the typically low-demand first quarter. With futures trading in a range of $10-$15 and the holiday season approaching, implied volatility for options is decreasing as traders avoid making bets on drastic price movements.

Soybeans

Grain traders are keenly awaiting information on South American soybean supplies from the USDA’s upcoming WASDE report. Significant rainfall in Brazil’s vital agricultural regions has heightened expectations for a record harvest next year from this major exporter, complementing a robust US crop. This favorable outlook has begun to apply downward pressure on soybean prices, crucial for diverse uses ranging from poultry feed to biodiesel.

Alumina

Aluminum manufacturers in China are reducing their production due to a surge in alumina prices, the essential raw material for this lightweight metal, which is increasing operational costs for the globe’s leading aluminum producer. This year, alumina prices have more than doubled, although they have seen a recent drop from peak levels, triggered by supply chain disruptions from Jamaica to Guinea and Australia to China. In contrast, the price of aluminum has seen more tempered gains, with futures increasing roughly 9% this year on the London Metal Exchange.

Natural gas

The widowmaker trade has turned negative. The spread between March and April natural gas futures altered last week, marking the earliest seasonal shift seen in nine years. This unpredictable trade, known as the widowmaker due to its volatility, essentially wagers on the tightness of supplies as the North American winter draws to a close.

Solar

The US solar industry is entering a phase of diminished activity, with installation levels expected to plateau through the end of this decade — even without potential impacts from President-elect Donald Trump. Following a period of rapid expansion, installations are forecasted to decrease by 1.8% to 40.5 gigawatts this year, based on projections from Wood Mackenzie and the Solar Energy Industries Association. Future growth is predicted to remain relatively steady for the next five years, with an average annual growth rate around 2%.