Volatility in the commodities market continues with oil prices lowest in nearly a year

Due to various factors, including geopolitical issues and industrial action, the commodities market is experiencing increasing volatility.

In fact, consumers might be interested to note that the value of wheat and natural gas have risen, whilst the value of heating oil and crude oil have depreciated.

Due to the frequent fluctuations in supply and demand characteristics, as well as other factors such as geopolitical issues, volatility in the commodities market is an ongoing issue.

According to Kate Leaman, chief market analyst at AvaTrade, the rising and falling value of commodities is a result of the following:

“Looking at our most rising table this week, both wheat and natural gas have risen in value as a result of geopolitical issues and industrial action. Due to potential strike action at a Liquefield Natural Gas (LNG) plant, in Australia, wholesale gas prices have once again increased in Europe.

“Australia is a key global supplier of LNG and considering three of their offshore suppliers threatened industrial action in September this year, the natural gas market is experiencing increased volatility. As Australia typically supplies Asia, if these strikes continue Asian consumers could look to another country, such as Qatar, for LNG and therefore compete with European buyers, thus creating a knock-on effect on prices.

“Wheat prices have also risen this year due to the ongoing Russo-Ukrainian War. Following drone strikes on Ukraine’s port infrastructure earlier this year, Russia terminated the Black Sea grain deal — a deal which initially guaranteed safe passage for ships carrying grains from Ukrainian ports.

“As Ukraine was the world’s fifth largest wheat exporter before the war, making up 10 percent of exports, the fact this deal is no longer in place means it’s likely prices of wheat will continue to soar.

“In this week’s most falling table, two of the top five instruments that have depreciated are crude oil and heating oil. Last week, prices of crude oil fell a further 2 percent, the lowest in nearly a year, with various crude oil futures declining to 10 dollars a barrel from nearly 100 dollars in late September.

“In attempts to boost global oil prices, in early September, Saudi Arabia and Russia cut oil production. Nonetheless, as demand for oil is decreasing globally, in part due to the transition to renewable sources of energy, the cut in supply is no longer causing prices to increase.

“As heating oil is a form of petroleum derived from crude oil, this instrument has been directly impacted and depreciated in value accordingly as well.

“Nevertheless, oil’s price has surged today amid worsening political instability in the Middle East due to Hamas’s attack on Israel, and we expect to see this reflected in our most rising/falling table next week.”