Russia Says It Will Rejoin Ukraine Grain-Export Deal -- Commodities Roundup

MARKET MOVEMENTS:

--Brent crude oil was unchanged at $94.69 a barrel.

--European benchmark gas rose 6.8% to EUR124 a megawatt hour.

--Gold futures rose 0.5%to $1,658.20 a troy ounce.

--LME copper edged down 0.1% to $7,655 a metric ton.

--Wheat futures fell 5.8% to $8.50 a bushel.

TOP STORY:

Russia Says It Will Rejoin Ukraine Grain-Export Deal

Russia said it would resume participation in a deal to allow Ukrainian grain exports, ending a dayslong standoff that threatened the steady flow of such shipments to world markets.

Grain markets fell after Russia's move. Wheat was down more than 5% early Wednesday, while corn prices lost more than 1%.

Over the weekend, Russia suspended its involvement in a deal with the United Nations and Turkey struck in July that allowed for the safe passage of grain exports from war-torn Ukrainian ports through the Black Sea to world markets. Moscow had said a maritime corridor used to facilitate the grain shipments had been used in an attack on Russia-occupied Crimea. Moscow threatened to board ships that left without permission.

But Russia's Defense Ministry said early Wednesday it had received written guarantees from Kyiv that Ukraine wouldn't use the corridor to attack Russian forces.

OTHER STORIES:

Oil Analysts Temper Price Forecasts for 2023

Oil market analysts have moderated their optimism for oil prices next year but largely still expect tightening global supplies and increasing demand in China to keep prices within sight of the $100 a barrel level.

Prices for Brent crude, the international oil benchmark, are forecast to stand at roughly $98 a barrel in the first quarter of 2023, $96 a barrel in the second quarter, and $97 in the third and fourth quarters, according to the average of responses submitted by bank analysts in a Wall Street Journal survey.

The forecasts are slightly less than the average polled a month earlier, with oil prices hovering in a low-$90 a barrel range in recent weeks. Compared with last month's survey, prices were lowered by $1 a barrel for the first quarter of 2023, $3 a barrel for the second quarter, $4 a barrel for the third quarter, and roughly $5 a barrel for the fourth quarter.

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California's Natural-Gas Bans Push Largest Gas Utility to Find a New Strategy

As California expands its efforts to phase out natural-gas use in homes, the nation's largest gas utility is trying to reinvent itself for a future in which far fewer customers use its core service.

Southern California Gas Co., a unit of Sempra, is studying how to repurpose its system--and handle the costs of doing so--as the state works to ban the sale of gas furnaces and water heaters starting in 2030. The state's initiatives are the latest in a series of measures aimed at reducing future gas use to address climate-change concerns. Already, about 50 California cities and towns have regulations in place to ban or limit gas hookups in new buildings.

MARKET TALKS:

Oil Pauses After Rumor-Driven Rally

0901 GMT - Oil steadies after powering higher in the previous session as risk assets latched onto unsubstantiated rumors that China was considering easing its Covid-19 lockdowns earlier than expected. Brent crude oil is unchanged at $94.67 a barrel while WTI adds 0.1% to $88.51 a barrel. China's Covid lockdowns have been a strong drag on oil so the rumors were taken seriously by traders, Stephen Innes at SPI Asset Management says. "Any nod from China that an earlier-than-expected China reopening is on the cards," could see oil power higher, he says. ([e-mail])

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Metal Prices Higher Ahead of Fed Interest Rate Decision

0836 GMT - Metal prices are moving higher ahead of the Federal Reserve's decision on interest rates, with the market expecting a 75 basis point hike from the U.S. central bank. Three-month copper is up 0.4% to $7,687 a metric ton while nickel is 1.3% higher at $23,745 a ton. Gold is up 0.4% to $1,655.40 a troy ounce. "Although there is some optimism that the Fed could hint at a rate peak, we don't see it happening," Edward Meir, president of Commodity Research Group says in a note." The Fed could shut the door on such talk, which would "deflate some of the recent commodity rallies we have seen" during October, he says.([e-mail])

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Palm Oil Rises Strongly, Driven by Soybean Oil Gains

0253 GMT - Palm oil prices rise strongly, driven by higher CBOT soybean oil prices, says David Ng, a trader at Kuala Lumpur-based proprietary trading firm Iceberg X. The continued escalation of tensions between Ukraine and Russia on the Black Sea grain export deal could disrupt the global vegetable oil supply and support the palm oil market in the near term, he says. He pegs resistance for crude palm oil futures at MYR4,500 and support at MYR4,000. The benchmark Bursa Malaysia Derivatives contract for January delivery is MYR133 higher at MYR4,366 a ton. ([e-mail])

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Chinese Iron-Ore Futures Rise, But Downward Pressure Remains

0233 GMT - Chinese iron-ore futures are higher in early trade, following Tuesday's gain on improved investor sentiment. Overall commodities prices soared which lifted the prices of iron-ore, Baocheng Futures says in a note. However, the analysts expect prices will trend lower amid weaker demand from steel mills. The most traded January iron ore contract on the Dalian Commodity Exchange rises 1.0% to CNY621.0 a ton. ([e-mail])

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Aluminum Rises on Report Some Chinese Smelters to Halt Output

0209 GMT - Aluminum rises in the Asian morning session on a report that some Chinese smelters will halt production, analysts say. Three aluminum smelters in Henan province plan to halt 110 kilotons of combined annual capacity due to losses, and to curb pollution during the Northern Hemisphere winter heating season, ING strategists say in a research note, citing a report from the Shanghai Metals Market. The three-month LME aluminum futures contract is 0.2% higher at $2,246.00 a metric ton. ([e-mail])

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Gold Little Changed; Focus on Fed

Gold prices are little changed in early Asian trade, after settling higher overnight on a weaker dollar. There are expectations among traders that the Fed will join the RBA is moving towards a slower pace of tightening, Oanda's senior market analyst Craig Erlam says in a note. "The expectations concerning the future course of U.S. monetary policy and the associated US dollar trend will presumably dictate the direction for the gold price in the short term," Commerzbank analysts say in a note. Spot gold is flat at $1,648.19/oz. ([e-mail])

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Oil Rises Amid Expectations of China's Covid-19 Policy Change

0027 GMT - Oil prices gain in early Asian trade with sentiment supported by a weaker USD and hopes for changes to China's Covid-19 policy. "Potential changes to China's Covid-19 policy could have significant implications for oil demand," ANZ analysts say in a note. China is the world's largest oil importer. There was speculation Tuesday on social media sites, such as Twitter, that Chinese authorities could set up a team to consider reopening options. Front-month WTI futures are 0.3% higher at $88.63/bbl, while Brent rises 0.2% to $94.82/bbl. ([e-mail])

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(END) Dow Jones Newswires

11-02-22 0826ET