Filtered by Subscriptions: Commodities Use setting Commodities
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 …
16th November 2022
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
We think the combination of subdued domestic activity and an economic downturn in most major economies will hurt demand for Chinese economic output in the coming months, prompting lower production and therefore import volumes of agricultural commodities. …
Commodity prices surged late in the week on the back of a slump in the US dollar, a fall in US real yields and some easing of COVID-related restrictions in China. However, we doubt that this heralds the start of a renewed upturn in prices. The …
11th November 2022
The global recession will drag on zinc consumption even further in the coming months, probably leading to renewed price declines. But, towards the end of 2023, supply concerns should push the price higher. Even though the price of zinc has risen recently, …
As the global economy enters recession, the outlook for natural rubber (NR) demand appears bleak. What’s more, stocks are already high. We expect prices to fall further in the near term, before some recovery in late 2023 on hopes of monetary easing and a …
Oil demand defies high prices and slowing economy, for now Commercial crude stocks rose this week even though more crude was used by refiners. And despite the increase in refining output, gasoline and distillate stocks fell on strong demand. We think …
9th November 2022
US petroleum product prices have risen again, mainly due to refinery-side supply constraints. We think this will translate into fewer product exports, but potentially even more crude oil exports. As we expected, US wholesale fuel prices have remained …
8th November 2022
China’s latest trade figures point to weak commodity demand both domestically and globally. Given that we don’t expect the slowdown in global economic growth to trough until early next year, we think commodity demand will remain subdued for a while …
7th November 2022
Most commodity prices rallied on Friday as rumours circulated that China was considering a relaxation of its zero-COVID policy. However, in the absence of any official statements to that effect and the relatively low levels of vaccination, we are …
4th November 2022
While front-month European natural gas prices have fallen sharply as concerns have eased around shortages this winter, longer-dated futures haven’t fallen by as much. That reflects how difficult it will be to fill storage without Russian gas flows next …
Gold and silver prices fell following Chair Powell’s hawkish comments yesterday. But if we are right in thinking US rates won’t rise by as much as markets expect, gold and silver prices should increase next year. We forecast prices to rise from $1,630 and …
3rd November 2022
Demand remains resilient to high prices and slowing economy, for now Last week’s fall in commercial and strategic crude stocks dragged total reserves to their lowest level since November 2001, contributing to a rise in prices today. Gasoline and …
2nd November 2022
Russia’s decision to withdraw from the Black Sea Grain Initiative will exacerbate sky-high prices and tight global supply, and adds to the likelihood that prices hover around historical highs for the next few months. To recap, the Kremlin announced at the …
1st November 2022
China’s official and Caixin October manufacturing PMIs diverged, but the crux of the matter is that both are painting a picture of weak industrial demand. With the services sector also struggling due to the zero-COVID policy, China’s consumption of both …
Overview – Despite the onset of a global recession, we think that energy prices will remain historically high in 2023 owing to severe supply constraints. The next round of EU sanctions on Russia’s oil and product exports, coupled with the output quota cut …
31st October 2022
The outlook for commodity prices has rarely felt more complex: while a looming global recession is set to drag on demand, the ongoing war in Ukraine is likely to mean some markets will remain jumpy over supply concerns. What will this all mean for prices …
Most commodity prices tracked the US dollar this week, falling sharply at the start of the week before staging a partial recovery in the latter half. Further dollar appreciation is likely given that the Fed looks set to raise its target rate by a chunky …
28th October 2022
Commercial stocks rise despite record exports US commercial crude stocks rose last week, as drawdowns from the Strategic Petroleum Reserve boosted commercial stocks. But the big news was that crude exports rose to a record high, probably encouraged by …
26th October 2022
We expect European natural gas prices to be high in 2023 as the EU will need to replace Russian gas supply for the entire year. This means demand for LNG imports will be strong, even if gas consumption falls. We forecast that the natural gas price (TTF) …
25th October 2022
China aside, steel production is in decline Although base effects will boost output in y/y terms in the final months of this year, the bigger picture is that slower economic activity and still-high energy costs will weigh on global steel demand and output …
The big story this week has been the roughly 20% week-on-week fall in the European natural gas price , as mild autumn weather has combined with weak economic activity and the still-high gas price to drag demand lower than usual for the time of the year. …
21st October 2022
As the global economy tips into recession, aluminium demand growth will remain weak next year. However, we think supply growth will be even softer, pushing stocks lower and the price higher. The aluminium price has fallen sharply since surging in the wake …
20th October 2022
China drives global production growth, for now The acceleration in year-on-year production growth in September paints a prettier picture of supply than reality. The global economic downturn and high energy prices will weigh on supply from here. …
SPR releases look set to continue in the coming months US commercial crude stocks fell last week, but distillate stocks rose slightly as high US prices probably took away some of the incentive to export. All eyes will be on today’s announcement by the US …
19th October 2022
Whilst we think coffee prices could have further to fall due to a strong US dollar, heightened investor risk aversion and the global economic downturn, constrained supply should put a floor under prices in 2023. Since the beginning of last year, coffee …
Bleak global economic backdrop casts a large shadow over the outlook for oil demand Global oil demand has been relatively income inelastic in the recent past We have pencilled in a stagnation in oil demand over the next year In this Energy Watch , we …
This week, commodity prices continued to be caught in the middle of an ongoing tug of war between tight supply and deteriorating demand. We ultimately expect that to play out in two different ways over the rest of this year. On the one hand, the deficit …
14th October 2022
We suspect that the reduced liquidity of inflation-protected Treasuries vis-à-vis their conventional counterparts is one reason why the price of gold has not fallen as much as might have been expected in the face of a surge in long-dated TIPS yields. …
Pressure on refineries is still evident There was a large rise in US commercial crude stocks last week, but product stocks declined, as demand held steady while refinery throughput dropped. That combination, mixed with uncertainty around French …
13th October 2022
We have lowered our estimate of global oil supply in 2023 after OPEC+’s announcement that it would cut production quotas from November. As a result, we no longer expect the oil market to be in a surplus, and we forecast that the price of Brent will end …
12th October 2022
OPEC supply cuts from November may not last long OPEC’s latest report shows that the group still expects demand for its crude oil to increase next year. This bolsters our view that the countries cutting supply from November will eventually reverse course …
Central banks have the tools to deal with liquidity crises arising from rising interest rates and falling asset prices. Instead, the bigger threat is that higher interest rates produce large and simultaneous falls in asset prices that threaten the …
11th October 2022
Crude oil prices rose by around 10% this week as OPEC+ announced a 2m bpd cut to its production quota, which all but guarantees that the market will be in a deficit in Q4. Accordingly, we are sticking to our forecast that the oil price (Brent) will be …
7th October 2022
Yesterday’s decision by OPEC+ to cut oil production quotas by 2mn bpd adds to signs that, in a world economy that is fracturing, Saudi Arabia is tilting away from the US and leaning towards a China-led camp. That would threaten to undermine the push by …
6th October 2022
OPEC+ decision adds pressure on the US to increase SPR releases The fall in US commercial crude stocks last week is just one factor pushing the Brent crude price over $93 today, with the other being the decision by OPEC+ to cut its output quota by 2m …
5th October 2022
Having prepped the market well beforehand, OPEC+ announced a 2mn bpd cut to its production quota from November. Of course, given that the group has been producing significantly below its quota, the decline in physical supply will be much less, though …
OPEC+ may announce a major cut to oil production quotas tomorrow. But with the current quota not being met, the actual hit to oil supply will be much smaller. We estimate that a 1m-barrel-per-day (bpd) cut to quotas would translate into a 350,000 bpd …
4th October 2022
The US dollar completed a round trip this week, continuing its relentless rise against most currencies early in the week, but then started to fall back from Wednesday afternoon and is now a touch lower than where it started. Predictably, this weighed on …
30th September 2022
Industrial metals prices rose following the release of the latest survey data on China’s manufacturing sector. But the average of the headline PMIs continued to decline, as did the average of the forward-looking export order PMIs. This suggests to us, at …
With the winter fast approaching and concern about natural gas supply from Russia looming large, we reviewed the relationship between temperature and gas demand in the EU. The key point is that the temperature, whilst important, will be a weaker driver of …
We now expect lower supply of grains over the coming months as the Russia-Ukraine war continues to reduce Black Sea exports and extreme weather conditions mean global stocks have been drawn down. We have therefore revised up our end-year price forecasts, …
29th September 2022
Drop-In: Spotlight – Economic fracturing, commodities and climate change …
Thermal coal prices in Asia rose to record highs in early September and have only fallen back slightly since. This was despite no major supply disruptions and in contrast to falls in other energy prices in Asia and Europe. It appears that demand for coal …
Rebound in implied demand likely to prove short-lived US commercial crude stocks fell slightly for the first time in four weeks, while product stocks decreased much further. The latter was mostly owing to the sharp increase in product demand. But we doubt …
28th September 2022
With the global electronics sector struggling and the more general global economic backdrop deteriorating, we think the silver price will remain under pressure over the rest of this year. The silver price has fallen fairly consistently over the past six …
27th September 2022
Most commodity prices plunged this week on the back of monetary tightening by many major central banks, including the Fed, and an appreciation of the US dollar. There is still considerable uncertainty about the scale of the global economic downturn, but …
23rd September 2022
Supply ticked up, but the bigger picture is of weak steel output A pick-up in supply from China boosted global steel production in August. However, with economic activity starting to slow and high energy costs across the world, the outlook is for steel …
22nd September 2022
High export demand is boosting refinery activity US commercial stocks rose for the third successive week in part due to a bounce back in imports, but also subdued domestic demand. The backdrop of rising interest rates and still-high prices suggest that …
21st September 2022
The supply outlook continues to worsen Global aluminium production rose at a slightly faster pace in August than in July, as Chinese production picked up and helped to compensate for a steeper reduction in European output. However, it looks as though …
20th September 2022
