Big Week Ahead For Commodities With FOMC, BOE And Saudi Arabia In Focus – What’s Next?

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Published: Sep 18, 2023, 15:38 UTC

A long list of the world’s most powerful Wall Street banks have described the current economic climate as “The Golden Age of Trading”.

Commodities Surge Amid Resurging Inflation, Global Energy Shock 2.0, and Escalating Food Crisis

Traders are pumping more money into Commodities right now than at any time in the last decade, to capitalize on the biggest macro themes driving the markets from Resurging Inflation, The Global Energy Shock 2.0 to an escalating Global Food Crisis, which is sending Agriculture prices skyrocketing to all-time record highs.

Central Banks at the Crossroads: G20 Interest Rate Decisions and the Battle Against Inflation

This week is all about the macroeconomics with half of the world’s G20 nations set to announce interest rate decisions. A 36-hour schedule of global monetary policy decisions may set the tone for the rest of the year as central banks grapple with the mantra of “higher for longer” and take account of the inflationary effect of booming energy prices.

Official data released last week showed U.S inflation accelerated at a scorching pace in August for a second consecutive month – adding yet another layer of complexity to the Federal Reserve’s efforts to bring consumer price pressures down to its 2% target.

Mounting evidence suggests inflation isn’t fully tamed across much of the world and the unstoppable rise in energy prices is seen as a very reliable indicator that inflationary pressures could be heading back up in the 4th quarter of the year.

Oil Prices Surge: Will They Reach $100 a Barrel?

Last week, WTI Crude Oil traded as high as $90.88 a barrel – tallying up a whopping gain of 41% since mid-June.

Meanwhile, Brent Crude Oil closed in on the $95 a barrel mark to hit a fresh 2023 record high. Over the last three months, the world’s most traded Oil benchmark has racking up a stunning gain of over 49% from its 2023 lows of $63.64 a barrel.

And the rally might not stop there!

Growing supply tightness and eroding inventories suggest that it’s only a matter of time before Oil prices soar back above $100 a barrel.

Saudi Energy Minister Prince Abdulaziz bin Salman’s speech at the World Petroleum Congress this week will be closely watched for cues on Oil’s next big move. Expectations are running high that the energy minister may once again warn speculators against shorting the Crude Oil market.

That’s bullish news for Commodity traders, but bad news for the Federal Reserve and its global central-banking peers, who now face one of their biggest policy dilemmas ever.