Karachi, August 18, 2022 (PPI-OT): Pakistan Commodities: Finding Equilibrium

A slowdown in the Chinese economy has led to fears of lower demand for oil in the near term, which has recently led to weakness in crude oil prices.

Talks of a revival of a nuclear deal between US and Iran are further pressuring prices, as the talks reaching fruition would bring with it Iran’s supply in the global market, of as much as 2mn bpd.

On the flipside, the planned draw in US Strategic Reserves is expected to conclude in 4QCY22, along with a shift from Russian Natural Gas to oil expected to take place as EU sanctions against Russia are imposed with full force. This could support crude oil prices.

Summer demand for gasoline in the Western front has declined over the past two weeks, and in some parts of Asia subsequently resulting in growing stock piles and lower fuel prices. Resultantly, gasoil and gasoline spreads were down 42%/83% from their recent highs.

South African coal exports to Europe soared 720% in 1HCY22, indicative of the soaring power crises in Europe amidst Russia’s invasion of Ukraine.

International cotton prices are being bolstered by falling cotton supply from major producers, including US and India, as adverse weather conditions took their toll on the crops. COTLOOK Index has rebounded by ~15% so far in Aug’22.