Displaying items by tag: Commodities

According to analysts at JPMorgan Chase & Co commodities could hit record territory and climb as high as 40% in the upcoming months. Investors tilting their portfolios into commodities are doing so in response to rampant inflation. Commodities might be at relative highs but there is lot of reason these prices could further elevate. Russia’s invasion pushed commodities prices higher as grains, metals, and fossil fuels were all affected. Goldman Sachs has also pushed raw materials as an inflation hedge.

Finsum: The trickle-down effect of oil prices alone could further boost commodities in the coming months.

According to analysts at JPMorgan Chase & Co commodities could hit record territory and climb as high as 40% in the upcoming months. Investors tilting their portfolios into commodities are doing so in response to rampant inflation. Commodities might be at relative highs but there is lot of reason these prices could further elevate. Russia’s invasion pushed commodities prices higher as grains, metals, and fossil fuels were all affected. Goldman Sachs has also pushed raw materials as an inflation hedge.

Finsum: The trickle-down effect of Oil prices alone could further boost commodities in the coming month.

Oil demand isn’t diminishing anytime soon, and while Russian Oil companies may suffer from sanctions and political pressure other oil companies are in a position to benefit. Goldman upgraded three oil companies that could capitalize. The first is Diamondback Energy from Texas; they have strong production and great revenues/earnings. Next up was Ovintiv which moved from Canada to the US two years ago but also has strong revenues and a half dozen consecutive quarterly gains in earnings. Rounding out the bunch is Hess which is a hydrocarbon extraction company which will benefit from the elevated prices in its shale search.

Finsum: These options look promising, remember fringe producers really benefit the most on the margins from elevated prices.

Coal is the forgotten younger child in the fossil fuel categories and in the age of ESG that has been exacerbated. Demand in the U.S. and Euro area has fallen drastically. For example, it's about half what it was a year ago in the U.S., However coals price has steadily grown as it averaged $168 per metric ton in January which is higher than $119 from all of 2021. What's driving that price increase is the shift in usage from West to East. Coal power is expected to grow by 4.1%, 11%, and 12% in China, India, and SEA respectively over the next three years. In many ways, it was the only available energy in developing countries and has prompted changes in supply chains in both Russia in Indonesia.

Finsum: Just because the U.S. has forgotten about coal doesn’t mean it won’t be a critical part of energy production in the next decade.

Oil prices rose closed higher on Monday to cap off big January, in fact it was the largest monthly gain in the last year. West Texas Crude rose to $88.15 a barrel and the sixth straight weekly gain. Fueling the rising prices are the rising tensions on the border of Ukraine and Russia which seem on the brink of war. Sure, OPEC has supposedly ramped up production by 400,000 barrels a day since August, and however, they have once again underperformed in output in January. While the continued on paper output is expected to be approved in the upcoming meeting the fact is the supply is not moving the needle.

FINSUM: The factors pushing oil prices higher are here to stay, and most likely not all priced in, it could be a big bull market for traditional energy in H1 2022.