[Fujitomi] The oil market shows a reset as it reacts positively to Russia and Saudi Arabia extending their production cut deal

(Tokyo crude oil and petroleum products)
On the 15th, Tokyo crude oil and petroleum products were bought back in response to overseas crude oil that rose sharply by midday. The front-month October crude futures were up 260 yen from the previous week at 36,190 yen, the front-month November gasoline futures were up 180 yen at 48,960 yen, and the front-month November kerosene futures were up 210 yen at 49,050 yen.
With the yen strengthening and overseas crude prices retreating, Tokyo markets fell from the night session. Although WTI and Brent showed soft trends at the start of the week, the decline was attributed to a souring view on US Baker Hughes’ oil rig count. The overseas crude price decline soured Tokyo crude, causing it to start below the night session's closing levels. Later, yen depreciation and a rebound in overseas crude narrowed the losses. Then, before midday, WTI surged. It became clear that Russia and Saudi Arabia agreed to extend production cuts through March 2018. Until then, WTI had followed the rise in NY gasoline, but after the announcement, WTI led a sharp rise, and Tokyo crude futures quickly rebounded to the 36,000-yen level. The extended and potentially broader cuts were suggested, prompting a surprised reaction in overseas crude, and while the front-month July WTI moved above $49, it is unlikely that this rally will persist, given that it would imply further increases in US oil production.

(Tokyo precious metals)
On the 15th, Tokyo gold rose toward the close. The front-month April gold contract was up 5 yen from the previous week at 4,479 yen, and the front-month April platinum contract remained at 3,390 yen.
Tokyo gold, discouraged by the stronger yen, was pressured into a softer tone from the night session. NY gold briefly recovered to the 1,230-dollar level early in the week, but buy orders did not sustain, and after 10 a.m. NY gold fell into negative territory. However, as political event risks were watched, it recovered again toward the 1,230-dollar level, reinforcing the impression of a solid floor for NY gold. Tokyo gold recovered back into the 4,470-yen range by midday and surpassed the earlier intraday high. Platinum moved into positive territory at around 1 p.m. Yet, as NY platinum faced resistance around 930 dollars, Tokyo platinum buying paused. Tokyo gold finally turned positive after 2:30 p.m., with the gains driven by NY gold’s upward move. The buying stance for Tokyo gold remained, awaiting President Trump’s planned visit to Israel on the 22nd.

(Tokyo rubber)
Tokyo rubber on the 15th generally rose further. The front-month October contract was up 4.9 yen from the previous week at 219.4 yen.
In early week trading, Tokyo rubber continued its solid tone and moved higher toward the front month, with the front month briefly hitting 220 yen around 10 a.m. The front month had been rising due to tightness in supply, while the next month extended gains to the 280-yen level at the start of the week. The front month faced resistance at 220 yen, and then fell back to the 217 yen range. Nevertheless, with the ongoing strength of the current month and a substantial widening of the backwardation, arbitrage to the front month remained attractive, and it repeatedly returned to the 219 yen level, breaking 220 yen briefly before 3 p.m.

(Tokyo corn)
On the 15th, Tokyo corn was pressured by a stronger yen and avoided a larger decline, though it still fell. The front-month May contract was down 10 yen from the previous week at 22,630 yen.
During Friday’s daytime trading, despite weak fundamentals, prices had held up, but in night trading they fell, with the front-month dropping below 22,500 yen. On the other hand, Chicago weather forecasts for the Belt and grain markets remained uncertain, prompting a small rebound, but the yen’s advance kept Tokyo prices under pressure. At the start of the week, a decline continued from night-end levels, beginning around 22,450 yen, with attempts to recover to the 22,500 yen area, though Chicago’s ongoing decline and the week’s weather-driven supply expectations weighed. The progress rate of planting reported by 5 a.m. Tokyo time will be crucial; whether it exceeds or falls behind the normal average. As the close approached, the front-month rose briefly, and the front-month turned positive.

(Tokyo US soybeans)
On the 15th, Tokyo US soybeans were mixed. The front-month April contract was up 70 yen from the previous week at 47,870 yen.
In the morning there was little movement, trading in a narrow range. With Chicago futures continuing to fall and the yen strengthening, the market paused its decline over the weekend. Chicago soybeans are bouncing back early in the week but only slightly. From the perspective of Tokyo prices, they are quite high relative to Chicago’s declines. Soybean planting progress is a concern, but shifts in planting to soybeans are also possible, so it is not the time to initiate buying.
https://www.fujitomi.co.jp/?p=15126