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Crude oil prices declined for a second straight session this morning as the market remains focused on surplus expectations. A huge inventory draw in the US and interest rate cut by the US Federal Reserve have helped to keep the losses in check
Energy – EIA Confirms Large Inventory Draw Last Week
As widely expected, the Fed has resumed cutting interest rates with a 25bp move yesterday. They think three more cuts will be enough to boost growth and prompt a revival in the jobs market, but the market is sceptical. Our US economist looks for four more 25bp cuts before trade clarity, a weaker US dollar, and lower borrowing costs start to stabilise the situation.
Meanwhile, US weekly inventory numbers from the EIA yesterday were mixed for the oil market. US commercial crude oil inventories reported large declines of 9.3m barrels over the last week, well above the 3.4m barrel draw the API reported the previous day. The drop comes as exports almost doubled from the week before, while imports fell.
Total oil stocks stood at a little over 415m barrels, 5% below the five-year average. Crude exports jumped by almost double the previous week and rose by 2.5m b/d to 5.3m b/d. On the other hand, crude oil imports fell by 579k b/d to 5.7m b/d over the reporting week. Meanwhile, crude stocks at Cushing fell by 296k barrels for a second consecutive week to 23.6m barrels over the reporting week.
For refined products, gasoline stocks fell by 2.3m barrels to 217.6m barrels, 1% below the five-year average. Gasoline demand rose by 302k b/day to 8.8m b/d. The market expected a marginal build of 611k barrels for gasoline stocks. In contrast, distillate fuel stocks jumped by 4m barrels to 124.7m barrels, against expectations of a 1.24m barrel increase.
This was the highest level seen since late January as exports continue to edge lower. This should help to ease some pressure on a tight diesel market, heading into the peak demand season for agricultural harvests and winter heating.
Metals – LME Copper Stockpiles in the US Rise
Copper inventories at US warehouses tracked by the LME rose for the first time since December 2023, up by 175 tonnes. In the first half of the year, inventories were moved to the US from LME and SHFE warehouses, largely driven by US prices trading above the benchmark LME prices. The divergence came as the US announced a 50% tariff on copper imports.
However, the tariff was later only applied to semifinished copper products; refined and concentrate imports were exempted. As a result, Comex prices returned largely in line with the LME prices. However, it still trades moderately higher, providing traders with an incentive to move metal into Comex rather than LME depots.
Meanwhile, the latest numbers from the National Bureau of Statistics (NBS) show that China’s refined copper output rose 15% year-on-year to 1.3mt in August, primarily driven by stronger ore purchases. Among other metals, zinc output rose 23% YoY to 651kt (the highest level since March 2024), as smelters benefited from higher fees and improved ore supply, whereas lead production increased 3.7% YoY to 667kt for the period.
The latest batch of trade numbers from Chinese Customs shows that imports of unwrought aluminium and aluminium products rose 13% YoY to 320kt in August, while cumulative shipments increased 2.7% YoY to 2.7mt in the first eight months of 2025, as seasonal demand picks up.
For steel products, imports fell 1.8% YoY to 500kt last month, and cumulative imports fell 14.1% YoY to 4mt in January–August this year. The country’s alumina exports jumped 26% YoY to 180kt in August, and year-to-date shipments increased by 59.3% YoY to 1.8mt in the first eight months of the year.
Agriculture – Sugar Prices Fall on Rising Supply
Sugar prices fell for a second straight session, by around 2.3% yesterday to close at US¢15.54/lb, on expectations of increased supply from top producers and rising demand concerns in China and Indonesia. The latest fortnightly report from the Brazilian Sugarcane and Bioenergy Industry Association (UNICA) shows that sugarcane crushing in Central-South Brazil stood at 50.1mt over the second half of August, an increase of 10.7% YoY. Output over this period rose 18.2% YoY to 3.9mt.
Along with that, higher output estimates from other major producing countries such as India and Thailand indicate a global supply surplus for the upcoming season. On the other hand, Chinese demand has slowed down as the country remains well stocked after heavy imports, while Indonesia has temporarily halted sugar imports to support local farmers.
Meanwhile, the sugar mix in CS Brazil over the fortnight was 54.2%, up from 48.8% a year ago. The cumulative cane crush so far this season still lags last year, down 4.8% to stand at 403.9mt, while cumulative sugar production totals 26.8mt, down 1.9% YoY.
Recent estimates from Statistics Canada show that all-wheat production could rise to 36.6mt (+1.9% YoY) for 2025 compared to its previous projection of 35.5mt. The rise in production estimates is largely attributed to higher anticipated yields (+1.8% YoY to 51.1bu/acre). Similarly, the agency projects soybean production could increase to 7.1mt, up from its previous estimate of 7mt.
However, it is lower than the 7.6mt (-5.7% YoY) produced last year. In contrast, corn for grain production estimates were reduced slightly from 15.6mt to 15.5mt for the above-mentioned period.
France’s Agriculture Ministry estimates that French soft wheat exports for the 2025/26 season could rise to 14.7mt, higher than the previous estimate of 14.3mt. This was also 41% higher than the previous season. The rise in exports could be largely attributed to the exports outside EU nations being raised from 7.5mt to 7.85mt for the 2025/26 season.
Meanwhile, soft wheat inventories decreased to 3.64mt compared to earlier projections of 3.87mt, due to a rise in exports. In the first estimates for corn, exports could fall 11% YoY to 4.8mt in 2025/26, while stockpiles could increase to 2.23mt (+1.7% YoY) for the period mentioned above.
Recent trade numbers from China Customs show that corn imports declined significantly by 90.5% YoY to just 40kt in August. Cumulative imports fell 93% YoY to 880kt for the first eight months of the year. High domestic production, large stockpiles and government-imposed restrictions on feed grain imports reduced demand for imported corn. Meanwhile, wheat imports fell 44.8% YoY to 230kt last month, while cumulative imports are down 75.2% YoY to 2.6mt in Jan’25–Aug’25.
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