Charts of the Day: Brent, Robusta and US30 index

• Brent oil prices take a breather after 3-day rally
   
• Robusta coffee prices hit all-time high due to bad weather in Vietnam
   
• US30 index reaches new record high ahead of US PCE inflation data
   
• Rate cut likely in September, with 71.5% chance of 25 bps cut

1) BRENT

Brent is taking a breather after the last three days of rally driven by heated tensions in the Middle East.

Traders remain cautious on the threat of Libya, an OPEC member, announcing that it will halt its production.

Libya sits on Africa's largest oil reserves and produced 1.15 million barrels per day (2-3% of total OPEC+ output) as of July 2024.

However, the remaining output cut by the rest of OPEC+ amount to some 2 million bpd.

Note that OPEC+ already has plans to restore about 500k bpd of the 2 million bpd in withheld supplies, starting in October 2024.

In other words, restored OPEC+ output in October may offset Libya's production that's been taken offline.

Also looking at the broader global economy, China's uncertain outlook adds to the uncertainty about the future of global oil demand.

The country has experienced a slowdown in demand growth amid a structural shift to electric and hybrid transportation, as well as weakened demand for petrochemical products.

2) ROBUSTA

Robusta bulls are trying to maintain momentum after pushing the price to an all-time high of $5065.71 amid the worsened weather conditions.

Robusta coffee skyrocketed to unprecedented levels due to adverse weather conditions in Vietnam.

The country's coffee production is expected to fall by 20% this year.

However, the International Coffee Organization reports a 5.8% increase in production last year, resulting in a surplus.

The USDA is forecasting a 4.2% increase in production for the 2024/25 season, which could put downward pressure on coffee prices.

3) US30 INDEX

The US30 index reached a new record high during yesterday's trading session (26 August) as investors await the US PCE inflation data due Friday, 30 August.

The upcoming reading will be closely watched by market participants, as it could potentially influence the Fed's highly anticipated interest rate decision in September.

At the time of writing, the probability of a rate cut stands at:

• 71.5% chance for a 25-basis point rate cut
   
• 28.5% chance for a 50-basis point rate cut

Lower interest rates could translate into indices moving higher.