Five Key Charts to Watch in Global Commodity Markets This Week

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(Bloomberg) — With US oil drilling in the doldrums, how do oilservice companies plan to ride out the slowdown? The answer to that question will be top of mind when leading drillers report earnings this week. The decline in oil demand also has refineries shutting down while the clock ticks on clean energy deployments in the US. And ethanol has taken center stage in the global trade war. 

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Here are five notable charts to consider in global commodity markets as the week gets underway.

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Oil

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Traders will be watching closely when Halliburton Co. and Baker Hughes Co. report earnings this week, looking to see how oilfield service companies plan to position themselves as US drilling slows. SLB, the world’s largest oil-services provider, showed signs of resiliency Friday, posting second-quarter adjusted profit that exceeded expectation. Analysts are expecting the industry to post the steepest profit decline in about four years.

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Refineries

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Meanwhile, refinery closures in Europe and the US are expected to reduce net capacity by 75,000 barrels per day this year, based on BloombergNEF tracking of more than 60 assets around the globe. In China, the refining industry is at a “crossroads as demand approaches its peak,” with 840K b/d of capacity at risk of closing before the end of 2028, according to BMI. Most of the expected reduction in capacity is likely to come from state-owned refiners, although independent processors are also under pressure.

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Ethanol

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UK ethanol producers are facing a dire future as a May trade deal with the US caught them off guard. The agreement removed tariffs on imports of American ethanol, and now a flood of cheap supply threatens to wipe out both of the UK’s domestic producers. The consequences are significant as the biofuel is vital to a swath of UK industries. Washington now has eyes on Brazil and has made the South American nation’s barriers to US ethanol a key part of a trade investigation. 

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Aluminum

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It’s lightweight, resists corrosion and is one of the most widely used metals, found in everything from cars, homes and even packaging materials. Now, aluminum is becoming more expensive for Americans since Washington imposed 25% import tariffs in March and then bumped it to 50% in June. Top US producer Alcoa Corp. says the tariffs cost it $135 million in the first half of the year, while mining giant Rio Tinto Group said its toll was $300 million. Alcoa Chief Executive Officer William Oplinger repeatedly has warned that US customers will bear those costs.

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Renewables

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Clean energy developers are in a rush to complete projects before the US starts phasing out tax credits under US President Donald Trump’s economic legislation. Installations are expected to fall 41% after 2027 when wind and solar projects begin to lose eligibility for the tax incentives, according to a report from BNEF. Deployments are set to fall to 48 gigawatts in 2028, compared with 81 gigawatts the prior year as developers race to complete projects before the cutoff date. 

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—With assistance from Mark Chediak.

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