popular articles

The impact of the banking crisis on commodities by Citadel

As the banking crisis wreaks havoc on the markets, Citadel says commodities should be spared.

Please share:

Despite the banking crisis, the impact on commodities should not be too strong. This is what the American hedge fund Citadel declared. Bank stocks and bonds fell Monday and oil was at a 15-month low, following the state-backed takeover of Credit Suisse by UBS Group, which raised concerns about the health of the global financial sector. However, Citadel indicated that the risk was not systemic at this stage and that many commodity loans were secured, thus limiting the major impact on the sector.

Why shouldn’t commodities suffer strong economic impacts?

According to Barrack, head of commodities at Citadel, global markets are far from a recession like the one in 2007-2008. The loss of 1-2% of global GDP will not have a significant impact on oil demand, which he expects to rebound in the second half of the year. It would take a reduction of 5 to 6% of world GDP to have a major impact on raw materials.

Citadel’s predictions on the impact of the banking crisis

Hedge funds and trading firms have made record profits in the energy markets over the past year due to extreme price jumps and the turmoil caused by Russia’s invasion of Ukraine. Citadel ended 2022 with a gain of $16 billion, the largest profit ever made by a hedge fund.

The uncertainty of the oil market

Citadel’s commodities arm has positions in oil, power, natural gas and agriculture. The Organization of the Petroleum Exporting Countries and its allies (OPEC+) agreed to a 2 million barrel per day cut in October last year that took effect in November and will continue until December 2023. However, the macroeconomic context remains an unanswered question as OPEC assesses the impact on demand. The fact that they are not yet reducing supply shows a calm level of confidence.

In conclusion, the banking crisis seems to have a lesser impact on commodities which should maintain their growth, according to Citadel.

Register free of charge for uninterrupted access.

Publicite

Recently published in

Enel doubled its net profit to €7 billion in 2024, despite the decline in electricity and gas prices. The company also reduced its net debt through asset disposals and implemented a strategy focused on profitability.
US data centre capacity surpassed 92 GW by the end of 2024, with a significant rise in investments and larger projects, driven by the increasing demand for artificial intelligence (AI).
US data centre capacity surpassed 92 GW by the end of 2024, with a significant rise in investments and larger projects, driven by the increasing demand for artificial intelligence (AI).
Viridien S.A. has completed a $925 million senior secured bond issuance to refinance its second-lien debt and strengthen its liquidity profile. Rating agencies have upgraded their assessments following this transaction.
Viridien S.A. has completed a $925 million senior secured bond issuance to refinance its second-lien debt and strengthen its liquidity profile. Rating agencies have upgraded their assessments following this transaction.
JSW Energy has completed the acquisition of KSK Mahanadi Power Company Limited for $1.93 billion, adding 1,800 MW to its operational capacity and bringing its total capacity beyond 10 GW.
JSW Energy has completed the acquisition of KSK Mahanadi Power Company Limited for $1.93 billion, adding 1,800 MW to its operational capacity and bringing its total capacity beyond 10 GW.
Velto Renewables, backed by Caisse de dépôt et placement du Québec (CDPQ), and Q ENERGY have signed an agreement to acquire renewable energy projects in Europe. An initial portfolio of 130 MW has been acquired in France, with an additional 400 MW planned in Spain and Portugal.
In 2024, Getlink reported a 5% drop in net profit, reaching €317 million. This decline is attributed to the temporary suspension of its ElecLink cross-Channel cable and the growing competition from ferries.
In 2024, Getlink reported a 5% drop in net profit, reaching €317 million. This decline is attributed to the temporary suspension of its ElecLink cross-Channel cable and the growing competition from ferries.
Baker Hughes and Woodside Energy have signed an agreement to develop a low-carbon energy production solution using the NET Power platform, targeting the energy and industrial sectors at small scale.
Baker Hughes and Woodside Energy have signed an agreement to develop a low-carbon energy production solution using the NET Power platform, targeting the energy and industrial sectors at small scale.
Vaalco Energy, Inc. has announced the signing of a new $300 million revolving credit facility with The Standard Bank of South Africa Limited, aimed at supporting its growth projects and investments across its African assets.
Vaalco Energy, Inc. has announced the signing of a new $300 million revolving credit facility with The Standard Bank of South Africa Limited, aimed at supporting its growth projects and investments across its African assets.
State-owned companies, such as Saudi Aramco, are responsible for more CO2 emissions than private firms like Shell or ExxonMobil, according to a study by the British think tank InfluenceMap.
Consolidated Edison announces the sale of 6.3 million common shares via Barclays, with proceeds intended to support its capital needs and other business purposes.
Consolidated Edison announces the sale of 6.3 million common shares via Barclays, with proceeds intended to support its capital needs and other business purposes.
Eco Wave Power shows notable financial progress for 2024, with reduced operating expenses and a strengthened cash position. The company continues its international expansion with key projects in Israel, the United States, Portugal, and Asia.
Eco Wave Power shows notable financial progress for 2024, with reduced operating expenses and a strengthened cash position. The company continues its international expansion with key projects in Israel, the United States, Portugal, and Asia.
Industrial group ABB announces a $120 million investment in two new US factories aimed at boosting production capacity to meet the strong demand from data centres.
Industrial group ABB announces a $120 million investment in two new US factories aimed at boosting production capacity to meet the strong demand from data centres.
Spanish banking group La Caixa takes a 5% stake in Veolia, becoming a strategic investor in the French environmental services giant. The collaboration aims to support Veolia's development plan.
Eni and PETRONAS partner to create a joint venture in the energy sector, combining their assets in Indonesia and Malaysia to form a strategic player with reserves estimated at 3 billion barrels of oil equivalent.
Eni and PETRONAS partner to create a joint venture in the energy sector, combining their assets in Indonesia and Malaysia to form a strategic player with reserves estimated at 3 billion barrels of oil equivalent.
Boralex reported financial results for 2024 marked by lower production due to adverse weather conditions but maintains a strong financial position thanks to record financing and the progression of its renewable energy projects.
Boralex reported financial results for 2024 marked by lower production due to adverse weather conditions but maintains a strong financial position thanks to record financing and the progression of its renewable energy projects.
Kineticor Asset Management and Pembina Pipeline Corporation announce a partnership to develop a major project in Alberta, combining an electricity generation plant and a data centre complex. The project aims to meet the growing demand of the local data centre industry.
Kineticor Asset Management and Pembina Pipeline Corporation announce a partnership to develop a major project in Alberta, combining an electricity generation plant and a data centre complex. The project aims to meet the growing demand of the local data centre industry.
Portuguese group Energias de Portugal (EDP) announces a 16% decrease in its 2024 annual profit, affected by disappointing performance in its renewable energy subsidiary, particularly due to the abandonment of wind projects.
Despite a drop in its profits in 2024, Eni confirms its strategy of energy transition and shareholder remuneration. The company plans significant investments in renewable energy and biofuel production.
Despite a drop in its profits in 2024, Eni confirms its strategy of energy transition and shareholder remuneration. The company plans significant investments in renewable energy and biofuel production.
Mainstream Renewable Power has announced the appointment of Morten Henriksen as CEO, effective from April 1, 2025, as part of its strategy to focus on cost reduction and expansion into three key markets.
Mainstream Renewable Power has announced the appointment of Morten Henriksen as CEO, effective from April 1, 2025, as part of its strategy to focus on cost reduction and expansion into three key markets.
Engie aims to accelerate its growth through 2030 by investing in renewable energy, batteries, and electrical grids, with a target of 95 GW of installed capacity by 2030.
Engie aims to accelerate its growth through 2030 by investing in renewable energy, batteries, and electrical grids, with a target of 95 GW of installed capacity by 2030.
In 2024, Technip Energies posted a significant increase in net profit, supported by liquefied natural gas (LNG) markets and decarbonised electricity production. The French group anticipates strong prospects for 2025.
French pipe manufacturer Vallourec reported a 9% decline in net profit for 2024 but plans to pay a dividend of €1.50 per share, its first in ten years.
French pipe manufacturer Vallourec reported a 9% decline in net profit for 2024 but plans to pay a dividend of €1.50 per share, its first in ten years.
Iberdrola achieved a record net profit of €5.61 billion in 2024, a 17% increase over 2022, driven by asset sales and increased investment in renewable energy.
Iberdrola achieved a record net profit of €5.61 billion in 2024, a 17% increase over 2022, driven by asset sales and increased investment in renewable energy.
Italian energy group Eni reports a 45% drop in net profit in 2024, reaching €2.46 billion, impacted by lower gas and oil prices. Its shares fell on the stock market after results fell short of expectations.
Italian energy group Eni reports a 45% drop in net profit in 2024, reaching €2.46 billion, impacted by lower gas and oil prices. Its shares fell on the stock market after results fell short of expectations.

Advertising