The prices of many industrial metals (IM) picked up this week on news of an easing of COVID-19 restrictions in China. However, we think weak demand and improved supply in China will send IM prices lower in the coming months, even if high energy prices keep them historically elevated.
On the energy front, crude oil prices are currently little changed w/w at around $110 per barrel. We think the likelihood of fewer Russian exports in the coming months will keep prices elevated, although slower demand growth and greater non-Russian supply should nudge prices closer to $100 by year-end.
Next week, energy and agriculture prices will continue to be driven by the implications of the war in Ukraine. It will be worth watching out for any payment problems reported by European importers of Russian natural gas, given that it is still not clear whether importers can make payments in a way that satisfies both the European Commission and Russia. On the data front, commodity prices could take direction from May PMI data for the US, Europe and Japan on Tuesday, as they will shed more light on demand.
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