One of many greatest tales of Q2 2021 has been the spike in ag commodity costs. Foodstuffs corresponding to soybeans and corn are buying and selling at ranges not seen because the World Monetary Disaster of 2008-12. WTI crude oil costs are following go well with, up roughly $18.00 per barrel (37%) year-to-date. In actual fact, June WTI is on the bull immediately and driving above $66.00.
In some ways, the bump in commodity costs isn’t an excessive amount of of a shock. The Fed’s limitless QE and Biden-era stimulus have devalued the Buck by greater than 10% since March 2020. Additionally, pipeline closures and employment challenges are weighing on gas costs. It’s estimated that the U.S. trucking business is working about 30% beneath its regular capability because of lagging labor participation. Subsequently, many analysts are predicting summertime gasoline/diesel shortages and far increased costs. With the height demand season quickly approaching, the U.S. common gasoline worth is $3.045, up from $2.870 one month in the past.
Final week’s U.S. CPI numbers illustrated the rising inflationary state of affairs. And, though the spikes in gas and commodity costs are main components, one has to surprise the place actual inflation at the moment lies. Two issues are for certain ― costs are positioned to maneuver a lot increased within the coming 90 days and the Fed has an necessary coverage resolution to make.
Let’s take a more in-depth take a look at how WTI crude oil has fared amid the commodity market insanity.
WTI Crude Oil Takes Out $66.00
Don’t look now, however $70-$75 is shortly coming into view for WTI crude oil futures. Proper now, a bullish bias is suitable because the Memorial Day vacation approaches.
USOIL
Overview: When you toggle the dynamic chart for USOIL to a weekly setting, you’ll see that crude oil is closing in on yearly highs ($67.94). At this level, a retest of $68.00 is a foregone conclusion.
Amid a COVID-19 disaster in India, and a contemporary assortment of lockdowns in Asia, crude oil stays in a bullish place. With summer season approaching within the Northern Hemisphere, be prepared for a steep six-week rally in Brent and WTI futures. If such a situation develops, ag commodities like corn and soybeans are headed to multi-decade highs.