Wall Street Is Hoping $100 Oil Ain't What It Used to Be -- Commodities Roundup

MARKET MOVEMENTS:

--Brent crude oil edged up 0.1% to $92.07 a barrel.

--European natural gas rose 6.4% to EUR42.35 a megawatt hour.

--Gold futures edged down 0.1% to $1,944.10 a troy ounce.

--LME three-month copper futures weakened 0.5% to $8,154 a metric ton.

--Wheat futures were flat at $5.79 a bushel.

TOP STORY:

Wall Street Is Hoping $100 Oil Ain't What It Used to Be

A string of inflationary shocks has challenged the Federal Reserve's effort to control price increases. Investors are worried the latest could be $100-a-barrel oil.

Crude's march closer to that mark has made Americans' commutes more expensive. Truckers who haul food cross-country are charging grocery stores more for diesel. Jet-fuel-reliant airlines are demanding higher fares. And manufacturers of everything from plastic toys to asphalt could face costlier ingredients.

Oil's rise has inspired fresh fears from Washington to Wall Street that energy, which the Fed largely excludes in its policy calculus, could throw off central bankers' attempted soft landing of the fuel-hungry American economy. Some investors and economists have compared the moment to previous periods in which booming oil prices have helped tip the country into recession.

"It makes things harder," said Rob Kaplan, former president of the Dallas Fed. "Just because the agencies or analysts or economists will 'x' out oil, the middle-class family doesn't get to 'x' it out."

A gallon of regular gasoline averaged $3.88 across the U.S. last week, according to federal record-keepers, up more than 25% since the start of the year. An August surge propelled consumer prices higher at their fastest pace in more than a year.

Economists fear rising costs will push Americans to slash spending on restaurants, travel and other areas, stalling growth in a condition often known as stagflation. Elevated energy costs could also tighten labor markets by pushing those with low pay or multiple jobs to think twice about long commutes to work.

But the extent of such consequences is far from clear, creating fresh uncertainties for investors who are trying to game out the impact of future interest rates in their bets on stocks, bonds and commodities.

OTHER STORIES:

Perdue and Tyson Under Federal Investigation Over Child Labor

The Labor Department said it is investigating plants operated by poultry giants Perdue Farms and Tyson Foods following a report that some of the companies' contractors employed migrant children to clean meat-processing plants.

The New York Times magazine last week published an article that said migrant children were working overnight shifts at some of the companies' plants.

Perdue and Tyson said they would cooperate with any federal investigation. The companies said they didn't know that children were working in their plants, which outsource cleaning to sanitation firms.

The Labor Department confirmed that it is investigating a Tyson plant and a separate Perdue plant, both in Virginia. The agency could try to hold these companies liable for the labor practices of their contractors.

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Galp Unveils EUR650 Mln Investments in Biofuels, Hydrogen Facilities

Galp said Monday that some 650 million euros ($692 million) would be invested in two large-scale projects in Portugal to reduce the carbon footprint of the Sines refinery and its products.

The Portuguese energy company said about EUR400 million would go toward an advanced biofuels unit that Galp is creating in a joint venture with Japan's Mitsui & Co., with the remaining amount allocated to a green hydrogen unit.

The joint venture, in which Galp holds a 75% stake, will invest in the advanced biofuels unit that will use waste residues to produce renewable diesel such as hydrotreated vegetable oil, and sustainable aviation fuel.

MARKET TALKS:

Palm Oil Prices End Higher After Export Data

1014 GMT - Palm oil prices ended higher at the start of the week on positive sentiment following the release of export data, says Abdul Hameed, director of sales at Pakistan-based Manzoor Trading. Malaysia's palm oil exports for Sept. 1-25 are estimated to be up 15% on month, according to cargo surveyor AmSpec Agri Malaysia. "We have to see a slower...pace of production to see any sustained rise in prices," Sathia Varqa from Palm Oil Analytics said. The Bursa Malaysia Derivatives contract for December delivery ended MYR36 higher at MYR3,717 a ton. ([e-mail])

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Oil Resumes Gains as Investors Pile Into Bullish Bets

0800 GMT - Oil prices rise as investors bet that oil markets will become increasingly tight. Brent crude adds 0.6% to $92.55 a barrel while WTI gains 0.6% to $90.61 a barrel. Speculative investors increased their net long positions on WTI by over 15,000 lots last week, suggesting they are anticipating higher prices. Analysts point to signs of a tightening market prompted by the efforts of Saudi Arabia and Russia to constrict the flow of oil and its derivatives to the global market. "The oil market has held relatively steady in recent days with tightness in the physical market coupled with Russia's recent export ban on diesel and gasoline offset by a fairly hawkish [Federal Open Market Committee] meeting last week," ING says in a note. ([e-mail])

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Metals Slide as Concerns Over Monetary Tightening Linger

0733 GMT - Metal prices slip as concerns over demand and the global economy continue to compound prices for industrial goods. Three-month copper is down 0.2% to $8,185.50 a metric ton while nickel is 0.6% lower at $19,300 a ton, hovering at a 14-month low. "The Fed is hawkish, and the macro environment is bearish ahead of a possible U.S. government shutdown next weekend," Peak Trading Research says in a note. Rising energy prices, a stronger dollar and interest rates being at a decade high are adding to the bearish sentiment, the research firm says. "The Fed's hawkish 'higher for longer' message last week pushed interest rates higher and risk assets lower," Peak says. ([e-mail])

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Iron Ore Falls; China's Steel Output Cap in Focus

0312 GMT - Iron ore futures prices are lower in early Asian trade despite restocking at steel mills ahead of China's Golden Week holiday. Tighter iron ore inventories at ports are leading to strong demand from steel mills, ANZ analysts say in a research note. However, mill margins remain unfavorable, thus rising input prices could further weigh on steel mills' profitability, the analysts add. Nanhua Futures analysts warn that China's policy of capping crude steel production could be gradually implemented, which would weigh on iron ore demand in the medium term. The most actively traded January 2024 iron ore contract on the Dalian Commodity Exchange is down 1.9% at CNY845.5 a ton. ([e-mail])

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(END) Dow Jones Newswires

09-25-23 0715ET