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The theme of global economic fracturing, which was the focus of our Spotlight Series of research last September, is at the centre of economic discussion in 2023, including at Davos. We held an online drop-in session yesterday to update clients on our …
19th January 2023
The election of left-wing candidate Lula for a third term as Brazil’s president is unlikely to accelerate Petrobras’ sluggish shift towards large scale biofuel production. We expect proposed oil sector reforms to weigh on biofuel demand, while ongoing …
18th January 2023
OPEC keeps 2023 forecasts unchanged OPEC left its annual supply and demand forecasts broadly unchanged but tweaked the quarterly profile. Like us, the group expects demand to rise faster than supply, which is a key reason why we expect prices to rise over …
17th January 2023
Output from Franc e’s beleaguered nuclear industry jumped last month, raising hopes that a recovery is underway. However, we think any increase in France’s nuclear output this year is likely to be modest and will probably be offset by reactor closures in …
Widespread unrest across several regions in Peru could make the central bank’s job of reducing above-target inflation even more difficult while also threating to hamper activity in some of the country’s key industries, such as mining and tourism. Peru’s …
16th January 2023
China’s rapid reopening and the likelihood of policy stimulus there has improved the macro-economic backdrop for commodities in 2023. But with developed economies in recession, and a somewhat stronger dollar and weaker US equities in Q1, we think a …
The dismantling of China’s zero-COVID policy has come quicker than we and many had expected. Whereas we previously thought the first quarter would bring the worst of the economic disruption from surging COVID cases, it now appears the worst is behind us …
13th January 2023
Commodity imports generally rose in December, but fell in 2022 as a whole. In a possible sign of optimism around reopening, soybean imports skyrocketed. China’s unexpectedly swift switch to living with COVID should see commodity imports, particularly …
Disruption from China’s reopening is fading faster than we had expected and we have revised up our forecast for growth there from 2.0% to 5.5%. This means that global GDP growth will be stronger than we had expected this year and energy inflation will …
12th January 2023
Commercial crude stocks surge and could have further to rise Commercial crude stocks surged last week at the fastest pace since February 2021, as net imports rose and disruption to refineries lingered from the recent cold weather disruption. Going …
11th January 2023
Most commodity prices declined this week, with energy prices falling especially sharply. Unseasonably mild weather in Europe and the US weighed on heating demand, prompting a plunge in gas prices. The European natural gas price currently sits at levels …
6th January 2023
European natural gas prices have halved over the past month as usage stayed low and LNG imports hit record highs. Barring dramatically colder weather, EU gas storage looks set to be in a more comfortable position than we had expected. As a result, we have …
Hit to implied product demand from cold weather likely to be short-lived Commercial crude stocks rose last week due to refinery closures in the wake of the extremely cold weather. But this should be short-lived, with most refinery plants back online soon. …
5th January 2023
The December survey data out of China were uniformly downbeat. The plunge in the official services PMI points to a fall in oil demand, but we suspect that the hit to industrial activity (and metals demand) has been more modest. Looking ahead, we expect …
3rd January 2023
US demand looks set to hold up well, despite slower economic growth Commercial crude stocks rose last week owing to a rebound in net imports, which was largely the result of the reopening of the Keystone pipeline. More interesting was the jump in implied …
29th December 2022
It was a fairly quiet week in commodity markets. The only notable move was a slump in natural gas prices. The EU eventually agreed its long-discussed natural gas price cap early in the week, but it comes with so much conditionality that it is difficult to …
23rd December 2022
Demand growth for industrial metals slowed in October and almost certainly weakened further last month. We expect demand growth to remain sluggish, or even contract, in the first half of 2023 as the global economy slides into recession, whereas investors …
Unusually, investors have been reducing their net-long position in the oil futures market, but increasing their position in industrial metals. We suspect this reflects optimism about China reopening at a time when the global economy is entering …
22nd December 2022
Global steel supply well and truly in the doldrums Global steel output is now firmly in contractionary territory by any measure. With several headwinds unlikely to relent soon, it is likely that output will weaken even further from here. Figures released …
Flat US production will keep stocks low This week’s report showed a sizeable drop in commercial crude stocks as net imports fell sharply. With US production unlikely to rise by much and plans for strategic reserves to be refilled next year, crude stocks …
21st December 2022
The EU’s new policy to limit gas prices is unlikely to be activated next year. And with so many caveats built in, it seems the only thing countries agreed on was that a cap was indeed needed to show unity. We are sceptical that the EU’s mechanism to cap …
20th December 2022
Aluminium production in decline, despite positive base effects A low base in 2021 is driving an increase in global aluminium output this year, but the bigger picture is that growth in supply is slowing as high power costs and soft demand take their …
The raft of inflation data and central bank policy decisions were key drivers of prices this week, but to some extent China stole the show. We now think that a dismantling of the zero-COVID policy is well underway. On paper, the removal of restrictions …
16th December 2022
Click here to read the full report. Overview – Tight financial conditions and China’s biggest COVID outbreak yet mean global economic growth will slow further in the first quarter of next year, dragging most commodity prices lower. The slowdown will be …
This is part of a series of reports outlining our key macro and market calls for 2023. Click here to view the full series. We think most commodity prices will ease back in early 2023, at the height of the global recession and monetary tightening in …
Bumper rise in crude stocks, little in the details to explain it While this week’s report revealed a whopping increase in commercial stocks, prices were up a little following the release. Instead, most attention is on the latest oil demand forecasts …
14th December 2022
OPEC lowers its oil demand forecasts for H1 2023 OPEC lowered its world oil demand forecasts for the next six months yesterday, but raised its demand forecasts for the following six months. This supports our view that the cut to OPEC+ output quotas from …
The recent slump in oil prices tells us one thing – that demand concerns are in the driving seat. Given that we expect a further slowdown in global growth in Q1 2023, we think prices could fall further. The Brent crude oil price has fallen by about 16% …
13th December 2022
Even if oil prices don’t rebound substantially in the near term, we doubt developed market equities in the energy sector will reverse course and underperform the rest of the stock market next year. Developed market (DM) energy stocks have outperformed the …
9th December 2022
A few weeks ago, we flagged the growing downside risks to our oil price forecasts due to weak Chinese demand. Despite the loosening of China’s COVID restrictions since then, we think the end to the flagship zero-COVID policy will only come in April 2023 …
Rather surprisingly, commodity imports generally ticked up in November, despite the wider deterioration in China’s trade position. However, we think this reflects undue optimism about an imminent pick-up in economic activity. Accordingly, we could see …
8th December 2022
Rising product stocks should eventually translate into lower crude demand Commercial crude stocks fell again, but there were some chunky builds in product stocks. Given the rise in stocks, product prices should fall further, which will eventually lead to …
7th December 2022
Overview – We think slower global economic activity and a somewhat stronger US dollar will weigh on commodities prices in the coming months. However, the recession should prove relatively shallow and we expect prices to be picking up in late 2023, boosted …
5th December 2022
Commodity prices generally rose this week as Fed Chair Jerome Powell’s comments that smaller interest rate rises were likely led to a depreciation in the US dollar. Prices were also supported by news that China would relax some pandemic-related …
2nd December 2022
There are only a few days to go until the next packages of EU sanctions on Russia targeting its oil trade come into force. There are a few key details still left to be finalised, but it seems to us that disruption to Russia’s oil trade and production is …
The latest manufacturing PMI data from China strengthens our view that China’s industrial metals demand growth slowed in November and will probably weaken further in December. China’s Caixin manufacturing PMI , released today, rose from 49.2 in October to …
1st December 2022
Refineries may reduce output soon amid soft domestic demand Commercial crude stocks plunged as the refinery utilisation rate rose, net imports fell sharply and strategic reserve releases continued to wind down. However, signs of lower domestic product …
30th November 2022
Global biofuel production unlikely to ramp up anytime soon … … as governments instead prioritise EVs as the future of green transport. As such, elevated food prices shouldn’t be exacerbated by biofuels competing for crops. Global food prices are at …
28th November 2022
There have been a few developments this week that have exacerbated downside risks to our current commodity price forecasts. First, new COVID-19 cases continued to surge to record highs in China, increasing the possibility of harsh widespread lockdowns . …
25th November 2022
With China now battling its most widespread COVID-19 outbreak since the start of the pandemic, the country and its economy face a dire few weeks. As a result, China’s demand for oil will come under pressure, and potentially its demand for natural gas and …
Metals demand growth improved markedly in the third quarter, but demand is unlikely to hold up as global economic activity deteriorates further. Our Capital Economic Demand Proxies, which we update every month here , aim to gauge the true state of …
24th November 2022
Commercial crude stocks fell for a second consecutive week and are likely to come under further pressure if strategic reserve releases wind down. Despite this, oil prices slid on demand worries and as rumours around the G7’s plan to cap the price of …
23rd November 2022
Industrial metal prices are starting to come under pressure again, after rallying by 10% in the first two weeks of November. We think that weak global demand will drag prices lower over the next few months. After rallying to a five month high, …
Cracks in global steel supply widening Global steel production growth is deteriorating a bit faster than we had thought. Even very flattering base effects failed to keep steel output growth in positive territory. With global economic activity weakening …
22nd November 2022
High oil prices have led to a recovery in US oil investment this year. But US crude production gains have been tempered by rising business costs and an emphasis on returning profits to shareholders. We expect the situation to be similar next year, with US …
21st November 2022
Weak demand and high energy costs weighing on aluminium output While the latest year-on-year increase in global aluminium production is suggestive of an improving supply environment, output actually fell in absolute terms and probably has further to …
Most prices fell this week as soaring COVID-19 cases in China raised concerns about the country’s commodity demand. Given the negative impact of COVID-related lockdowns on travel, it is no surprise that there was particular weakness in the price of …
18th November 2022
More declines in store for commercial crude oil stocks Oil prices were little swayed by the latest EIA data showing the biggest decline in commercial crude stocks in about three months last week, given that the data were similar to industry data released …
16th November 2022
The negative correlation between the US dollar and the price of oil has reasserted itself in recent months, and we think it will persist as the looming global recession pushes the dollar higher and oil price lower. Although the price of oil hasn’t risen …
OPEC supply drops but further falls to come OPEC’s monthly report for October showed a sharp drop in the group’s production, and further falls are likely if members are to abide by their new quotas from November. The OPEC Monthly Oil Market Report for …
14th November 2022
