MEASUREMENT & MONITORING
FLOW OF COMMODITIES
DAILY FX
HERE’S WHAT YOU NEED TO KNOW ABOUT OIL IN 2020
Commodities are the lifeblood of commerce
and economic growth. DailyFX, the leading
portal for forex trading news, has built an
interactive tool showing global commodity
imports and exports over the last decade.
This unique tool allows traders to spot
developments in the flow of commodities
and the growth of both supply and demand
while comparing the changes to critical
economic indicators.
‘Global Commodities’ takes the form of a
re-imagined 3D globe where the heights of
countries rise and fall to show the import
and export levels of a range of commodities
over the last decade. The data visualisation
allows users to switch views from a single
commodity or market and show information
relevant to that commodity or market’s
performance.
John Kicklighter at DailyFX has used the tool
to put together his top five things you need
to know about oil in 2020:
1. GLOBAL TRADE DISRUPTIONS
MAY AFFECT IMMEDIATE DEMAND
While the trade war has become a hot topic,
the concerns of nationalism are leading long-
term investors to wonder if global demand
may drop without trade growth seen in
prior years, which could hurt the long-term
demand for oil and its price.
2. LONG-TERM DEMAND FROM
ENVIRONMENTAL REGULATIONS
COULD SEE THE MARKET
BIFURCATED
Oil market insiders have long been aware of
the IMO 2020, which is effectively maritime
energy standards and is set to be the
most significant change in environmental
standards on record. While the focus is on
shippers using lower sulphur grades and
pushing up the demand and price of cleaner
forms of energy, naturally, global trade
disruptions, trade frictions or the lack thereof,
can act as a multiplier on the impact of this
measure.
3. THE RISE OF ALTERNATIVES WILL
LIKELY CONTINUE TO WEIGH ON
OIL’S DOMINANCE
The rise of alternatives helps to explain why
the longer-dated bets of oil prices made
two-five years ago are below current prices.
80
PECM Issue 42
For example, solar power has been more
popular, and the price of solar power has
dropped by 50% since 2009. At the same
time, major E&P firms are pressured to look
for environmentally friendly forms of energy
(i.e. not oil).
4. OPEC+ OR ROPEC PRODUCTION
CUTS MAY SOON EASE, AND THE
PRICE EFFECT COULD HURT
OPEC + Russia has met a challenger for global
crude supply in the United States, but the
two nations make up many production cuts
that have stabilised the market. If either or
both decide that they have paid their dues,
and the market is stabilised, we could see
a large influx of supply coming onto the
market that could act as a broad ceiling on
prices.
5. SANCTIONS ON IRAN MAY
PROVE TO BE THE OIL MARKET
WILDCARD
Sanctions around OPEC’s third-largest
producer, Iran remain in focus in 2019 as
the U.S. government has moved to tighten
sanctions, but Iranian President Hassan
Rouhani has said there’s no chance of the
nation’s exports falling to zero after the U.S.
tightened its position on sanctions waivers.
The IMF (International Monetary Fund) has
stepped in saying such sanctions could
result in aggressive inflation in Iran if the U.S.
tightens sanctions.
To learn more about Global
Commodities visit:
www.dailyfx.com/research/global-
commodities