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Europe’s natural gas pipeline network is already extensive, and we think that it is going to get bigger in the coming decades. Existing pipelines in Turkey are set to be expanded and new pipelines from Africa and the East Mediterranean Sea will probably …
22nd February 2021
Abnormally cold temperatures in the US, particularly Texas, have forced a significant share of US oil wells and refineries offline this week. Oil prices initially surged on the back of this disruption, but they have since retraced most of their gains. In …
19th February 2021
Although we expect oil prices to rise a bit further this year, we doubt that we are in the early phase of a new “super cycle” in commodities. In fact, we project that the returns from commodities will lag those from US equities considerably over the next …
Deep freeze could boost crude stocks next week US commercial crude stocks plunged last week owing primarily to a rebound in exports. Next week, inventories could rise as the deep freeze in the southern parts of the US has knocked out several million bpd …
18th February 2021
With the first batch of Chinese trade data for 2021 not due for another few weeks, this Update outlines the key developments to look out for. Overall, we expect imports of refined metal to fall back while ore and scrap imports rise, all of which supports …
17th February 2021
We think that slower growth in US housing starts and increased supply will weigh on the price of US lumber over the coming quarters . That said, prices are likely to remain elevated relative to past standards . The price of US lumber soared to …
12th February 2021
Supply disruptions and strong electronics demand have lifted the tin price from its virus-induced lows. But we anticipate that a switch in consumer spending away from goods towards services once lockdowns are relaxed, will act as a drag on the price of …
The price of Brent crude oil breached the $60 per barrel mark this week for the first time in over a year, in a continuation of its strong performance since COVID-19 vaccines were announced in November. Given our upbeat oil demand outlook for H2 2021, we …
Recent market moves have led us to revise up our end-2021 oil price forecast. But our story remains the same: one of resurgent demand later this year at a time of constrained supply . Having underperformed other commodity prices for much of last year, the …
OPEC production increase to be short lived The slight easing of quotas meant that OPEC oil production rose in January. However, output will fall back again this month as Saudi Arabia implements its 1m bpd of voluntary production cuts . The OPEC Monthly …
11th February 2021
Commercial crude stocks approaching pre-virus levels US commercial crude stocks fell last week, while implied product demand strengthened. We expect these trends to continue over the coming months, as COVID-19 containment measures are eased . The EIA’s …
10th February 2021
Despite our relatively conservative forecast of supply growth, we still think that the price of iron ore will fall sharply this year owing to slower growth in China’s demand . The price of iron ore had a superb 2020, rising from around $80 per tonne to …
Strong Chinese demand has fuelled a rally in commodity prices But history suggests that prices will fall back as stimulus is withdrawn That said, the “greening” of the global economy is a medium-term positive for metals The latest rally in many commodity …
8th February 2021
In an otherwise fairly quiet week, some wild gyrations in the silver market were the focus of investor attention . Starting late last week, the price of silver surged by 20% to reach a multi-year high on Monday. Reportedly, the retail investors that had …
5th February 2021
Our forecasts assume that virus-related travel restrictions will be relaxed in H2 2021 But further setbacks on the virus front could mean that restrictions are kept in place That said, there are reasons to believe oil prices would hold up even in such a …
4th February 2021
Many media reports have linked silver’s recent price volatility to last week’s targeted buying of a handful of small US equities by retail investors. But we reckon that it marks just another bout of silver’s well-known price volatility . The price of …
Commercial crude stocks to remain on a downward trend Commercial crude stocks continued their counter-seasonal decline last week, even as net imports rebounded and refinery throughput eased back slightly. We expect inventories to decline further over the …
3rd February 2021
An often-overlooked factor supporting oil prices last year was the surge in stockpiling by China and India. But given the rebound in prices since then, and how much inventories have now risen, we expect stock-related purchases of oil in both countries to …
2nd February 2021
Despite a surge in gold prices last year, physical demand for gold fell precipitously. But we think that a brighter economic outlook will boost consumer demand this year and help to prop up the gold price . Total demand for gold fell in 2020, largely due …
The latest fall in China’s manufacturing PMI readings is a further sign that its economy is slowing. Nevertheless, activity there, and elsewhere in Asia, remains strong and we think that it will hold up well in the near term, which should support …
1st February 2021
It was another largely uneventful week in commodity markets . For all the talk of an impending ‘super cycle’, the prices of most commodities have generally continued to struggle to extend the large gains made towards the end of last year. In fact, as we …
29th January 2021
Despite the ongoing economic uncertainty, we expect that global demand for meat and animal feeds, such as corn and soybeans, will rise over the next few years . During the last global recession, consumers in the advanced world switched away from expensive …
Overview – Industrial metals prices had a stellar 2020, with prices ending the year higher than where they started. But just as China’s strong economic recovery lifted metals prices in 2020, so will China’s slowdown in growth weigh on them in H2 2021, as …
28th January 2021
We think that coffee prices will be among the few agricultural commodity prices to rise in 2021, not least because a relaxation of COVID-19 restrictions should boost out-of-home consumption . After falling in the first half of 2020, the prices of almost …
Vaccine progress means stocks have further to fall US commercial crude stocks sank last week, as net imports plummeted. Assuming that progress on COVID-19 vaccines continues, we expect a pick-up in demand will weigh on stocks from Q2 onwards . The EIA’s …
27th January 2021
Higher prices and a backlog of uncompleted wells should ensure that US crude oil production edges up slowly over the next couple of years. But with many of the challenges facing the sector still lurking in the background, we remain doubtful that …
Slower production growth in China on the cards in 2021 Growth in global steel production climbed in December, once again led by a rise in China’s output. We expect growth in China’s output to slow in 2021, while ex-China output should recover lost ground. …
26th January 2021
Overview – The revival in oil demand and prices should continue to gather pace in 2021 as the lifting of quarantine measures enables the release of ‘pent-up’ demand associated with leisure activity. Meanwhile, a recovery in industrial activity should …
25th January 2021
Build in stocks rounds off a gloomy week for oil Following five consecutive weeks of declines, commercial crude stocks in the US rose last week. Together with still-high rates of new COVID-19 infections, this points to a gloomy near-term outlook for oil …
22nd January 2021
Despite some parts of China re-introducing lockdown measures and reported virus cases around the world continuing to spiral upwards, the prices of most commodities held up well this week as investor enthusiasm for risky assets remains high. We suspect …
Overview – In a reversal of the trend in 2020, we expect oil prices to rise this year and the prices of industrial metals and agriculturals to fall. We suspect that oil demand, particularly in developed economies, could surge in the second half of the …
China-led increase in global output to continue in 2021 Global aluminium production grew again in December. After a stellar 2020, we suspect that China will continue to lead the way in dragging global aluminium output growth even higher in 2021 . …
20th January 2021
After the broad-based rally of the last few weeks, the prices of many industrial commodities dipped a little this week, reflecting concerns about rising new virus cases and the widespread tightening of virus containment measures . The rally may well …
15th January 2021
We think that the surge in many agricultural commodity prices is somewhat overdone. Although ending stocks for the major grains and soybeans will be lower in the year ahead, they will still be relatively high by historical standards, which is why we …
Despite the new South African coronavirus variant, it appears that PGM production in the country will hold up well, for now, since the virus-containment measures are not as severe . The recent surge in new daily virus cases, in part caused by the latest, …
14th January 2021
OPEC production to increase in January, but fall later in the quarter OPEC’s oil production rose in December and is likely to pick up again this month in line with its higher quotas. However, the group’s total output will almost certainly fall in February …
The latest China trade data showed that commodity import volume growth eased back a little in December. But tailwinds from 2020’s stimulus should keep import volumes strong for a while yet . China’s exports climbed by 18.1% y/y in US dollar terms, …
US product demand to remain lacklustre in the coming weeks Crude inventories continued their downward trend, helped by the ongoing increase in crude inputs to refineries. Implied product demand picked up, but product stocks also rose . The EIA’s weekly US …
13th January 2021
After staging a stellar recovery in 2020, there is considerable momentum in metals prices as we embark on the new year. That said, while prices may rise further in the near term, we think that they will start to ease back in the second half of 2021 as …
With the notable exception of oil, we are generally negative on the outlook for commodity prices this year. While oil should benefit from a vaccine-related revival in global transport activity, we expect that the prices of industrial metals and …
12th January 2021
We expect the prices of most energy commodities to rise in 2021, as demand revives in line with the global economic recovery. But coal prices are likely to fall back, as demand growth in major consuming regions drops back after the winter weather-related …
11th January 2021
After a strong finish to 2020, most commodity prices built on their gains in the first week of January , as investor sentiment continued to prove supportive and Saudi Arabia announced that it would unilaterally cut oil production in February and March. In …
8th January 2021
Overview – The prices of industrial metals continued to surge in December, capping off a strong 2020. However, we expect that prices will fall this year as growth in China’s demand slows on the back of the gradual withdrawal of fiscal stimulus and tighter …
Overview – Energy commodity prices for the most part ended 2020 on a high, buoyed by strong seasonal demand, an increase in investor risk appetite and a weaker US dollar. And while energy commodities were the underperformer in 2020, they should be the …
7th January 2021
If implemented, Saudi Arabia’s shock pledge to cut oil production by 1m bpd in February and March should offset much of the current lockdown-related weakness in global oil demand. Consequently, the market should remain in a deficit, which is why we have …
Weakness in product demand could last for some weeks yet Crude stocks plummeted at the beginning of 2021, explained by an increase in refinery activity and persistently robust exports. However, rising product stocks point to subdued consumption . The …
6th January 2021
Overview – Commodity prices rose in December in spite of a tightening of COVID-19 restrictions in a number of developed economies, which will weigh on commodities demand at the start of this year. Markets seem to be focusing on a brightening demand …
5th January 2021
China’s December PMI readings suggest that the pace of economic expansion has started to ease, which chimes with our view that the demand for and, prices of, most metals will fall this year . The official manufacturing PMI fell to 51.9 in December, down …
4th January 2021
Implied product demand to remain steady, for now Crude stocks sank a little last week as exports rose. Meanwhile (and more encouragingly), implied gasoline and distillate demand were up in the face of rising COVID-19 restrictions, which suggests that …
23rd December 2020
The price of palm oil has climbed resolutely since May, trading currently at a nine-year high of around MYR 3,800 per tonne. Nonetheless, we think that the price will fall in 2021, as supply constraints ease . The recent rally in the price of palm oil has …
