Commodity prices have held up well over the last quarter, encouraged by positive economic data out of China, falling expectations of US interest rate rises and signs that crude oil stocks are finally starting to drop. Looking ahead, the picture is more nuanced. The macroeconomic backdrop for commodities will remain broadly positive, characterised by robust global growth and loose monetary conditions. However, we expect China’s economy to slow, which will weigh on the prices of most industrial commodities. Meanwhile, the price of oil will continue to be buffeted by OPEC policy and trends in US shale production, but the bigger picture is that the market will be comfortably supplied.
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