Opening Statement from the February 2022 CCPM Forecaster

Opening Statement from the February 2022 CCPM Forecaster

Originally published on February 6, 2022 (pre-market release)

Overview

The big story for commodities traders since the release of the January issue has been the tremendous rally seen in crude oil. The rally should not come as a total surprise given continued progress being made in the global recovery along with Russia’s military buildup in Ukraine. There is even talk of a Russian-led invasion of Ukraine in coming weeks. If this happens, crude oil is likely to soar well past $100. Apparently, traders are factoring in this possibility along with the collapse in diesel inventories and the recent winter storm in Texas. 

Perhaps the second biggest story for traders is that the Fed is considering raising interest rates sooner than previously expected and by a greater amount due to inflation concerns. 

Despite widespread presence of the Omicron coronavirus variant (which we had been downplaying as a null event) the global economic recovery continues to make progress. But the recovery remains vulnerable to supply chain issues which will most likely extend throughout much if not all of 2022. Moreover, the tight labor force issue is adding to inflationary pressures.

To an increasing extent, the recovery is also being pressured by high and rising crude oil and natural gas pricing. Oil and gas inventories are becoming constrained due to pre-COVID production cuts and longer-term plans to shift to “renewable energy.”

For the first time in nearly two decades...