【Fuji Tomi】Tokyo crude oil and petroleum products fall sharply following the overseas crude oil plunge

（Tokyo crude oil and petroleum products）
February 26 Tokyo crude oil and petroleum products fell sharply in line with overseas crude oil declines. The crude futures for October fell 2,180 yen to 35,450 yen, gasoline futures for November fell 2,000 yen to 48,280 yen, and kerosene futures for November fell 1,920 yen to 48,560 yen.
Although the OPEC summit decided to extend production cuts for nine months, it seems the market did not discuss an expanded cut, which led to disappointment selling and a sharp drop in overseas crude, causing the Tokyo crude market to plunge mainly in crude. About a 2,000 yen drop. In the day trading, bargain-buying appeared at reasonable levels and the market showed resilience as usual. While Tokyo had been aggressively buying on expectations for the OPEC summit before, even this sudden drop can be considered as not breaking the downward trend. Some see the growth in U.S. gasoline demand as a future supportive factor, but on the other hand, the Trump administration plans to release strategic stockpiles, so a rapid increase in crude inventories could become a selling factor going forward. An eventual fall below 35,000 yen for the crude futures seems unavoidable. In the early afternoon, a rally in WTI strengthened and around 12:30, hit the previous day’s low. The 49 dollars level acted as a resistance, suggesting traders disliked the upper prices. Tokyo crude also updated its night-time lows in step with WTI’s new lows.

（Tokyo precious metals）
Tokyo gold fell on the 26th. The April Gold futures fell 7 yen to 4,495 yen, and the April Silver futures fell 6 yen to 3,409 yen.
Tokyo gold declined as NY gold paused its rise. NY gold held around the 1250-dollar level, but still showed lackluster movement. NY gold recovered into the positive territory toward noon, but the yen’s appreciation prevented Tokyo gold from fully rebounding. Trading after hours was extremely thin, with a mood of waiting dominating. Expectations for a Congressional testimony by the former FBI director after Memorial Day kept a buying stance. However, around the 4,500 yen level, buying should be lightened.

（Tokyo rubber）
On the 26th, Tokyo rubber saw a sharp drop again. The front-month October contract fell 11.4 yen to 216.2 yen.
The Tokyo rubber market dropped sharply over the weekend. The new nearby November contract began trading but remained in backwardation, continuing the same trend of an inverted market. This caused the near-month to be sold, renewing expectations of a further decline. In the morning there was some resistance around 220 yen, and a some rebound, but once 220 yen was broken, the loss widened rapidly. The nearby also fell sharply, leading to selling pressure on the front month as well. With increased production period and Shanghai rubber stockpile concerns, the near-term weakness of selling on rallies is expected to continue. Depending on the extent of the drop in the nearby months, the front-month price could fall below 210 yen.

（Tokyo soybeans）
On the 26th, Tokyo soybeans were broadly subdued with a small decline. The front-month May futures fell 100 yen to 22,230 yen.
Tokyo soybeans declined in response to Chicago's drop, but the downside was restrained. It rebounded to 22,290 yen on the back of Chicago’s earlier gains, but then sold off again following Chicago’s decline, with the decline still limited. The lack of market activity is seen as contributing to this. Chicago will be closed at the start of the new week, so attention will be on Chicago’s price moves after Memorial Day. Given repeated aggressive buying, the market is considered potentially overvalued, so a pullback over the weekend is expected.

（Tokyo U.S. soybeans）
Tokyo general soybeans showed little activity. The front-month April futures fell 540 yen to 46,300 yen.
Chicago fell sharply, and after the restart Chicago continued to be sold, and with the yen’s appreciation advancing, Tokyo general soybeans were expected to fall sharply. However, activity remained subdued and the downside continued to be restrained. With Chicago on holiday at the start of the week, there is a factor to refrain from launching a move. Liquidity is likely to become even thinner, so postponement is expected to continue.
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