Commodities are careering into a second half that promises as much turmoil as the first, with the world facing an escalating energy crisis, copper plunging on Fed-fuelled recession fears, and Russian President Vladimir Putin delivering a shock for Shell Plc.
Russia’s move to reshuffle ownership of the Sakhalin-2 gas plant spells trouble for Shell‘s plan to offload its stake. An analyst in Japan warned it “could even trigger a panic” in liquified natural gas markets.
Energy crises and central bank moves to crush inflation present headwinds across markets, underscored by copper’s collapse on Friday below $8,000 a tonne.
If copper really is a barometer of the world economy, we should be getting worried. The metal used in electrical wiring just tumbled below $8,000 a tonne for the first time since early 2021. The gathering drumbeat of warnings about a global recession is weighing on all metals. Investors will scrutinise the Fed minutes on Wednesday for clues on what their July meeting might bring. But there’s not much in the short term that bodes well for copper, with the major risks pointing downward: further escalation in Europe‘s energy crisis could trigger a deeper sell-off in coming weeks.
Oil just capped its first monthly drop since November on fears of a global downturn, but despite that the supply situation remains tight. Saudi Aramco will likely release its selling prices for August next week. Refiners and traders are expecting another increase.