The oil market (NYMEX:CLX13) still is moving on the deal or no deal coming out of Washington. Forget about the provocative data coming out of China like record crude imports or even reports of surging Gulf Oil state production. Forget about talks with Iran. It is all about Washington and the budget showdown that is moving our markets.
Talks between Iran and the U.S., Russia, China, Britain, France and Germany in Geneva are not providing any excitement. Perhaps it is because everyone is very skeptical of Iran’s real intentions. Still Iran says it wants to set a path of trust.
Natural gas (NYMEX:NGX13) continues to rally on cold temperatures and stronger demand and exports. The U.S. may have abundant supplies of natural gas but in the rest of the world there are worries about shortages ahead of winter! No wonder we have been talking about long term calls on this market! For example, consider a Reuters report that China will raise the on-grid prices paid to power generators that use natural gas to encourage the use of cleaner forms of energy and address the impact of possible supply shortages, the country's top planning agency said on Tuesday. The announcement, dated Sept. 30 but published on Tuesday, also confirmed that on-grid coal-fired power prices have been cut to reflect falling coal prices. On-grid prices paid for coal-fired generators have been cut on a region-by-region basis, ranging from around 0.009 yuan per kilowatt hour in Beijing to 0.025 yuan in Shanghai.
China, desperate to address long-standing air pollution problems, has vowed to use pricing mechanisms to encourage cleaner power generation, and will also pay higher prices to utilities that have installed emissions control technologies. But its ambitious plans to encourage natural gas-fired power are being held back by shortages that could drive generation costs even higher and reduce the incentive for utilities to make the switch from coal.
Even Iran with some of the largest reserves in the world could be hit by shortages. Iran faces serious gas shortages over the next two years because its giant South Pars field has not been developed quickly enough and domestic demand has grown, oil ministry news service Shana reported the country's oil minister as saying. Iran sits on the world's largest known gas reserves, according to estimates by BP, and has signed several agreements to export large volumes to other countries, most recently Oman.
Sugar is going parabolic (NYBOT:SBH14). How high can this sugar buzz go? Corn is cheap and U.S. biofuel production is at a record so Brazil may look to the U.S. to meet its ethanol demand. Sugar supply is tight. The Public Ledger says that sugar output from mills in Brazil's center-south plunged 23% in the last two weeks of September from the first two weeks of the month after rains kept mechanized harvesters from fields, local industry association Unica said last week.
In other markets of note, the Australian dollar hit a four-month high after Australia’s central bank signaled a reluctance to cut interest rates further. OJ is running out of juice despite the citrus greening disease. Orange-juice futures fell Monday after U.S. retail sales of the breakfast beverage dropped to the lowest level in at least 15 years.