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

OPEC+ has chosen to delay the resumption of oil supply until April, which has prompted options traders to adopt their most pessimistic stance in months. Focus is shifting towards soybeans as the US Department of Agriculture is set to release its latest supply-and-demand forecasts this Tuesday. Additionally, the US natural gas “widowmaker” strategy has inverted, suggesting a departure from prior expectations of an oversupply by the end of winter.

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

Oil

Options traders are exhibiting a marked bearish attitude towards Brent crude following OPEC+ nations’ decision to further postpone the restart of oil production that had been halted since 2022. This additional delay appears to be aimed solely at lessening price declines during the typically low-demand first quarter. With futures trading within a $10-$15 range and holidays on the horizon, implied volatility for options is also decreasing as traders avoid betting on large price fluctuations.

Soybeans

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

Alumina

Aluminum manufacturers in China are reducing production as alumina prices, a critical component for the lightweight metal, soar and contribute to rising costs for the world’s largest producer. Alumina prices have more than doubled this year, despite a recent drop from all-time highs, due to supply chain disruptions spanning Jamaica, Guinea, Australia, and China. Conversely, the price trajectory of aluminum has seen more subtle rises, with futures up about 9% this year on the London Metal Exchange.

Natural gas

The widowmaker trade has taken a downturn. The spread between March and April natural gas futures changed last week, marking the earliest seasonal transition seen in the last nine years. This unpredictable trading practice, aptly termed the widowmaker, essentially bets on the tightness of supplies as North American winter comes to an end.

Solar

The US solar industry is entering a phase of decreased activity, with installation levels expected to stabilize through the end of the decade — even if there are shifts due to President-elect Donald Trump. After a period of rapid expansion, the number of installations this year is projected to drop by 1.8% to 40.5 gigawatts, according to Wood Mackenzie and the Solar Energy Industries Association. Projections for future growth indicate a relatively flat trajectory over the next five years with an average annual growth of about 2%.