Crude oil prices continued spurting higher this week, exploding to a one-month high at $49.33 on Monday. Monday's action was driven by an announcement from OPEC, the cartel that oversees almost 40% of global production, suggesting that they may cut back production to boost prices. Up to this point, OPEC nations have been increasing oil production despite falling prices in an effort to increase income.
Meanwhile, the United States looks more likely to remove a crude oil export ban that has been in place since the 1970's, a policy which has kept crude oil bottled up in the US, depressing prices. Oil producers, interested in selling their products abroad at higher prices, have been lobbying for increased exports.
This week, a government report suggested that exports won't raise domestic gasoline prices, a fear of many politicians and citizens. If US exports increase, domestic oil prices will rise, which caused more buying interest in the US crude oil futures.
Despite these major bullish factors, crude oil prices still face numerous headwinds, including a slowing Chinese economy and the potential weight of increasing Iranian oil exports if the nuclear accord goes through.
As a result of these opposing factors, crude oil prices swung drastically this week, dropping over $6 per barrel during the week, finishing positive on the week by midday Friday near $46.00 per barrel.
El Niņo gets Rice Market Crackling
This year's El Niņo phenomenon (a mysterious warming of equatorial Pacific Ocean temperatures) is already the strongest in almost 20 years, and some weather forecasters expect it could become the strongest since the 1950's.
A strong El Niņo has been shifting rain away from Southeast Asia toward South America instead, cutting into Asia's rice production. Top-producing countries, like India, Thailand, Indonesia, and the Philippines, are suffering from dry weather, which could reduce their rice output. Rice is a major part of these nations' diets, and shortages have led to civil unrest in the past, making rice production especially important to politicians as well as grain traders.
As a result of potential shortages, rice is the only grain market that has been gaining ground in recent months, climbing 28% since May to 11.8 cents per pound on Friday. In the same period, other commodities like corn, wheat, oats, and soybeans have declined substantially.