Global Commodities: Dancing in the Dark
The desk interprets J.P. Morgan's latest commentary as an indication of increased volatility in global oil and LNG markets, fueled by high shipping activity amidst ongoing geopolitical tensions. Per the full note, liquefied natural gas (LNG) tanker crossings through the Strait of Hormuz have surged, achieving utilization rates not seen since the onset of conflict in the region. As oil prices experience fluctuations around a $10 range, traders must navigate the complexities presented by military escalations and shipping inefficiencies that remain prevalent downstream. The desk anticipates potential ramifications in FX positioning related to commodity-sensitive currencies as traders digest these developments.
What the desk is arguing
The current state of global commodities—oil and LNG—is marked by heightened tensions and fluctuating supply dynamics, as noted by J.P. Morgan. Following recent military activity in the Middle East, LNG exports from Qatar have spiked, with more than 10 LNG vessel exits recorded in a week, reflecting a utilization rate near wartime highs. This data signals a heightened level of activity, but security concerns are causing vessels to operate without broadcasting their positions, complicating market assessments.
Moreover, fluctuations in oil prices, oscillating within a $10 range amidst contradictory signals of improved supply and geopolitical risks, suggest a complex trading environment. The desk points to the importance of monitoring signals from the LNG fleet, especially as the maritime industry adapts to operating in dark mode due to security issues, which could impact overall visibility and demand forecasting.
Where it sits in our coverage
We're currently sitting with a consensus target for oil-related currencies at 1.075, with estimates spanning from a range of 1.04 to 1.12. Specific targets include: - jpmorgan: 1.10 (Mar26) - bofa: 1.04 (Mar26)
Our view aligns closely with the jpmorgan target, sitting at the upper end of the prevailing forecasts, reflecting a bullish sentiment among some traders based on heightened commodity flow.
How other firms see it
J.P. Morgan and another firm hold a slightly optimistic view concerning oil-related currency movements. In contrast, bofa remains skeptical, suggesting lower targets based on market fundamentals.
As the oil and LNG markets react to these developments, watch how this evolving situation may influence USD/CAD and AUD/USD, which correlate with commodity price movements directly tied to natural gas and oil outputs.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01LNG tanker crossings have surged, indicating strong exports from Qatar amid geopolitical tensions.
- 02Oil prices are fluctuating within a $10 range, affected by both supply improvements and military risks.
- 03Vessels operating in dark mode complicate the tracking of global LNG flows, presenting challenges for market forecasts.
- 04Traders should monitor commodity-sensitive currencies closely as these dynamics evolve.
Market implications
Traders should focus on the $1.075 level as a critical threshold for commodity-sensitive FX pairs, particularly as fluctuations in oil prices could influence USD/CAD and AUD/USD. Continued LNG export activity could bolster demand for currencies tied to energy production.
Risks to this view
A significant escalation in military activity in the Middle East or disruptions to shipping routes through the Strait of Hormuz could force a reevaluation of current commodity forecasts, leading to rapid fluctuations in associated FX pairs.
Hello, and welcome to At Any Rate. I'm your host, Otar Ghebwaze, and I lead international natural gas research here at J.P. Morgan.
Oil prices continue to trade in a $10 range and moved higher over this week, oscillating on reports between improved flows from the Middle East on one side and potential military escalations on the other. However, while oil is flowing, problems remain further downstream and in specialized products, namely in oil products, shipping, and also in liquefied natural gas. In gas markets and LNG markets, Hormuz situation around Hormuz and Qatar exports remain at the forefront of the market developments.
We saw a very active two weeks as of beginning of this week, when we estimated 10 plus exits from LNG vessels through Strait of Hormuz. This equates, on our estimates, to almost 30% utilization rate based on the Hormuz exit. This is wartime high, and an important assumption here is that this is a signal-based metric, so-called AI signal, which vessels usually send to the satellites and which helps the global maritime industry to maintain its safety, readiness, et cetera, et cetera.
However, since the beginning of the war, more and more vessels choose to operate in so-called dark mode or without sending such signals because of security concerns mainly and because of hiding these vessels from the satellites. So, what we are trying to do is we take a snapshot of global LNG fleet daily, and then we see which of these vessels are inside the Gulf, and then we compare next day which of these vessels might have left Gulf and which might have actually entered the Gulf. The important assumption here is that we need to get these signals that vessel projects inside the Gulf and then outside the Gulf.
If they traverse all these waters without sending any signal, then it's becoming hard for us to find these vessels without having an actual satellite imagery where we can track it vessel by vessel. We track capacity utilization both on loadings based on loadings and the Hormuz exits. And while the utilization based on exits increased to 30% plus, the utilization based on loadings dropped to about 5% over last week, which is driven by the lack of available empty vessels inside the Arabian Gulf and which lacks the capacity to load more cargos.
Going forward, we expect that there will be variation in this weekly utilization numbers. Some weeks it will be higher, then they will run out of empty vessels, which will need to be organized. But on average, on a normalized basis, we expect something like 20% probably is a right number to model Qatari utilization going forward, absent of a major resolution of the wider situation.
Meanwhile, on the ground in European gas market, we saw unusually warm September, which almost eliminated the heating demand in the region. With the heating degree days about 90 days, it's almost half of what we observed similar period last year. Especially the last week of September was unusually warm when we observed almost 100 million cubic meters per day of lower gas demand due to the lower heating needs.
However, despite the increased flows through Hormuz and despite these loose fundamentals on the European grounds, we see prices moving higher and this trading above 80 euro per megawatt hour for the front month contract at the time of recording. We think that this is partially following the oil moves as Brent is firmly above $100 right now. And we also had an attack on LNG tanker in the Strait earlier this week, which added to the uncertainties of Qatar supply, especially as European and especially German storage levels are tracking near all time lows.
Going forward throughout the winter, we think that there is a significant risk and risk premium embedded in winter period, and we expect prices to be volatile, but average near 75 euros per megawatt hour before moving lower from late winter and into 2027. We are particularly bearish on 2027 prices driven by rising global LNG supply. We see global LNG supply growing year over year in 2027, even with Qatar remaining largely absent from the market, which is a stress scenario and not our base case.
And we see even more supply of about 200 BCM in 2028 and 2029, half of which will come from the United States, which we think is highly, highly reliable supply source, and which this development we think will move the market focus to the pre-war narrative, where the future LNG supply or expectations about LNG supply rather than current storage levels are the main drivers of the price formation. Thank you for tuning into the commodities edition of J.P. Morgan's At Any Rate podcast.
We look forward to continuing the conversation next week. This communication is provided for informational purposes only. Please refer to J.P.
Morgan research reports related to its content for more information including important disclosures. 2026 J.P. Morgan Chase & Company All Rights Reserved. This episode was recorded on October 9, 2026.
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