【Fuji Tomi】Tokyo crude oil and oil products fall back, disliking the collapse in overseas crude oil prices

(Tokyo crude oil and petroleum products)
On the 24th, Tokyo crude oil and petroleum products fell back as overseas crude oil prices declined. The front-month August crude futures fell 340 yen to 34,570 yen, the front-month September gasoline futures fell 360 yen to 48,460 yen, and the front-month September kerosene futures fell 300 yen to 44,290 yen.
Overseas crude oil prices fell due to concerns about rising US crude production and high inventory levels. In the previous day’s Tokyo market, overseas crude oil had been bought up on expectations of a rise, but those gains were erased. In the day session, yen weakness helped Tokyo prices shrink their declines, but the pattern of limited downside is the usual. For the weekend, Baker Hughes’s rig counts in the US and a monitoring committee of five countries are scheduled. The committee comprises Algeria, Kuwait, and Venezuela from OPEC, and Oman and Russia from non-OPEC. However, none of Algeria, Kuwait, or Venezuela have reached production cut targets, and Venezuela and Algeria are already above the levels they agreed to cut from, making it difficult to call for further cuts from other oil-producing nations. Therefore, hopes for stronger voluntary production cuts may turn to disappointment. We should anticipate another round of overseas crude oil price declines at the start of next week.

(Tokyo precious metals)
On the 24th, Tokyo gold fell further on the back of NY gold’s decline. The front-month February gold contract fell 7 yen to 4,440 yen, and the front-year February platinum contract fell 23 yen to 3,423 yen.
Tokyo gold continues to fall, erasing the 4,450 yen level seen in after-hours trading. Early in the morning there were some new lows from after-hours trading, but with yen weakening, Tokyo gold’s downside is becoming less pronounced. Meanwhile, NY gold remains soft, so a rebound is not very strong. Tokyo continues to trade in a box range, but with NY gold making new highs, buying on dips remains prudent. There is no change in expectations for the second quarter. However, yen strength is also a concern, so buying on a rotating basis is desirable.

(Tokyo rubber)
Tokyo rubber on the 24th generally fell. The front-month August contract fell 2.6 yen to 247.4 yen.
In the morning, buy orders were favored by higher off-hours Shanghai rubber, but by around 10 o’clock they slipped into negative territory. Shanghai rubber weakness exists, and domestic origin selling also weighs as a negative factor, so a cautious stance of selling rallies is sensible. The week ahead will see the front month settle for delivery, but as April approaches, there are no new buying catalysts in sight. Public interest remains weak, which adds to the concern of higher prices.

(Tokyo US soybeans)
Tokyo general soybeans on the 24th were extremely quiet. The front-month February contract fell 20 yen to 48,280 yen.
With Chicago continuing to fall and the yen strengthening, Tokyo opened the night session lower. Given the yen’s weakness earlier and the continued drop in Chicago, the night session decline feels insufficient. In the daytime, yen strength eased somewhat, but Chicago’s continued decline pushed prices lower gradually. Still, a solid bid at around 48,160 yen provides some support, keeping the downside in check. Brazil’s meat scandal may become a new bearish factor for the Chicago corn market, adding to downward pressure on Chicago. At the start of next week, we expect prices to fall below 50,000 yen.

(Tokyo US-produced soybeans)
Tokyo general soybeans for the US market on the 24th were very quiet. The front-month February contract fell 20 yen to 48,280 yen.
Chicago’s sharp drop continued, and Tokyo’s daytime trading saw further declines, but activity remained subdued. It would not be surprising to see a fall below 50,000 yen, but that may be a passing point, with next week likely to focus on the 47,000 yen level. Tokyo’s sharp fall appears unavoidable.
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