Daily Brief United States: CRB Commodity Index, Copper, Novonix , Us Silica Holdings, Zephyr Energy and more

• Brent crude has weakened by $10 since early April, with the prompt time spread indicating plentiful supply relative to consumption
• Demand for crude oil for combustive fuels like gasoline and diesel is expected to peak towards the end of the decade, while demand for natural gas liquids used in petrochemical production is set to rise
• Preliminary demand data for April showed signs of improvement, with observable oil inventories increasing, particularly in China, due to lower oil prices prompting stockpiling

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• The Holy Grail of Commodity Trading? If there is a holy grail of commodity trading, I would say it’s becoming a master in reading the movements in the futures forward curve.
• Knowing how futures contracts change and how the curve shifts from contango to backwardation, and vice versa, gives commodity traders a lot of useful info about the physical supply and demand.
• While many market participants argue about the meaning and definition of backwardation and contango, the direction in which the spreads are actually moving is far more important to us.

• A near-term key NVX goal is to secure additional customers and lock in demand.
• NVX recently formed an agreement with PowerCo SE, part of the Volkswagen Group, to develop, test and analyze synthetic graphite anode materials customized for PowerCo’s requirements.
• If successful, this could lead to a new supply agreement.

• SLCA has seen a decrease in shares and reduction in debt, making its enterprise value cheaper
• Core thesis remains unchanged, with focus on potential split of company’s two businesses for separate valuations
• Recent acquisition in frack sand business by Atlas Energy provides comparable valuation exercise for SLCA, suggesting potential value of company’s assets and opportunity for increased valuation in the future

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• 1Q24 production (excluding NGL) in the Williston was 1,151 boe/d.
• This is 140 boe/d above our expectations and ~100 boe/d above 4Q23 production.
• Production in March (excluding NGL) had increased to 1,212 boe/d.