At the close of the midday trading session on August 18, the majority of major domestic commodity futures contracts recorded gains, with SC Crude Oil surging nearly 6%, followed by Fuel Oil up over 5%, LPG gaining close to 5%, and Ethylene Glycol advancing more than 4%. Low-Sulphur Fuel Oil, Synthetic Rubber, and Pure Benzene all rose by more than 3%. On the downside, Polysilicon fell over 4%, while Eggs, Tin, and International Copper declined more than 1%, with Copper and Red Dates dropping nearly 1%.

Where to Begin

The National Climate Center announced on August 18 that this summer's climatic patterns indicate the El Ni帽o phenomenon is developing rapidly and may become the strongest event ever recorded. El Ni帽o, characterized by persistently warmer-than-average sea surface temperatures in the central and eastern equatorial Pacific, is the opposite phase of La Ni帽a. Occurring every 2 to 7 years on average, these events typically last 9 to 12 months. The phenomenon disrupts global atmospheric circulation, triggering abnormal weather across various regions and significantly impacting agriculture, ecosystems, and livelihoods worldwide.

Rising Tensions in the Middle East

According to a research note from Everbright Futures, the stalemate in the current geopolitical landscape is likely to further elevate the geopolitical risk premium in crude oil pricing. In the physical market, spot cargoes of Middle Eastern oil delivered to Asia continue to command a high premium, reflecting shifting buyer sentiment amid persistent expectations of a closure of the Strait of Hormuz. The SC main contract has rebounded to around 600 yuan per barrel, with oil prices exhibiting a broadly firm yet volatile trend.

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