LiveWire

Malaysia is struggling with another wave of the virus causing a widespread lockdown measure. The main issue related to an oil output slowdown is the labor shortage. 20% to 30% of the potential production is lost due to a labor shortages. Lower-than-expected supplies from Malaysia are supporting benchmark palm oil futures, which rebounded as much as 2.2% on Tuesday after tumbling to their weakest level in more than four months a day earlier. More than 70% of the plantation workforce are migrant workers and the country produces about 26% of the world’s palm oil.

Oil traded above $71 a barrel as the outlook for a rising demand extended in some economies. West Texas Intermediate was 0.4% higher after ending little Monday. Gasoline demand in May was 5% higher than the same period in 2019, according to the median estimates. Attention will soon turn to the OPEC+ meeting on July 1st, with a possibly large supply increase ahead in August, given the group's demand projections.  

Domestic coal prices in China surged to record heights this past winter and remain higher than the government's green zone. This further highlights the current tightness of the global coal market seen below. China's National Bureau of Statistics reported record levels of thermal generation through the first four months of the year, something that has accelerated demand for domestic coal and also support a seaborne market by extension. 

Prices are most likely going to continue rising quickly. Most of the cobalt trading happens on the London Stock Exchange, but currently lacks some liquidity a buyers and sellers usually decide on prices privately. Carmakers can't yet hedge their exposure to battery metals such as cobalt since there's not enough trading on the London Metal Exchange--this has been said to be related to the sketchy provenance of some of those metals (said to be linked to child labour in Congo). Goldman Sachs is beginning to offer more hedging services.

The price of gold kept dropping as investors are now waiting for the next Fed meeting which should give clues about the country's monetary policy. Spot gold fell 0.8% to $1,862.38 an ounce at 12:13 p.m. in Singapore after dropping 1.1% on Friday.