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Most soft commodities have fallen sharply since mid-May, with wheat declining the most (31%), supporting the thesis that inflation may have peaked in June. Similarly, oil (WTI) peaked on June 8th at USD122 after supply worries somewhat faded and concerns around falling demand surged. It is now trading below USD88pb, down 4.5% today on global growth worries triggered by weak macro data from China for the month of July. The poor figure caused China's central bank to announce a surprise interest-rate cut. Markets still expect interest rates in the US to increase by 50bps next month, followed by another 25% bps hike later on.

Oil is reversing an earlier decline after Russia said oil exports to Europe via one of its pipeline had been suspended since early August, reviving concerns about tight supplies. Later today we will hear about EIA Short-Term Energy Outlook and API Weekly Crude Oil Stock. On a technical perspective, it remains on a downtrend, with a resistance at around USD93.50 and some support at around dollar 87.5 pb.

Gold rose to the highest level since early July as investors are bracing for a cloudy outlook in growth and a stormy period in US-China relations with House Speaker Nancy Pelosi heading for Taiwan. The precious metal often benefits from bouts of geopolitical turbulence, and the Pelosi trip only adds to tailwinds.  

Oil dropped on demand fears after China's unexpectedly weak economic data. US Crude lost 4.5%, trading near USD94. Such a sharp drop let one guess bears may be in control and a retest of the prior month's lows could be a plausible scenario for the coming day. Keep in mind OPEC's meeting this Wednesday.

Oil advanced to USD110 a barrel on tight supplies and signs of solid demand for near-term supplies. Sentiment has not quite turned positive yet, but the momentum is slightly bullish in the near term. Since a recession cannot be ruled out, there are still the risks that significant demand destruction could take place in the second half if economic conditions worsen. An analyst from US banking giant Citi is in fact warning that oil could collapse to USD65 a barrel by the end of this year and slump to USD45 by the end of 2023 if a severe recession hits. Nonetheless, in the near term, the reality is that China is re-opening and making progress on avoiding lockdowns, which is helping support the demand picture.