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The strength in US product demand is unlikely to be sustained Commercial stocks slumped as imports fell sharply. Meanwhile, implied product demand rose, but we think the usual summer boost to demand may be more subdued this year as economic growth slows. …
24th May 2023
Lower steel production in April a sign of things to come Steel mills reduced output in April in y/y terms, meaning that global production is down year-to-date. We think that producers will continue to limit output for a few more months due to tepid …
23rd May 2023
Dealmaking was a major driver of commodity prices this week. The 11 th hour extension of the Black Sea Grain Initiative alleviated fears of Ukraine’s grain exports being cut off from world markets, pushing corn and wheat prices down. And in the US, …
19th May 2023
Our in-house metals demand proxies show that growth held steady in February. While growth will accelerate in the coming months due to base effects, we think that underlying demand is more subdued. The CE Demand Proxies aim to measure physical demand for …
18th May 2023
Commercial stocks build, prices likely to remain subdued Commercial stocks rose for a second consecutive week even as production fell and refinery utilisation picked up. Releases from strategic reserves supported stocks and are likely to continue to do so …
17th May 2023
Overview – Most commodity prices have moved lower over the past month as concerns about demand have intensified and risk appetite has soured. We think prices will continue to struggle over the next few months as tight monetary policy feeds into slowdowns …
16th May 2023
Note: We’ll be discussing the radical shake-up facing global energy markets and our long-term energy demand and climate forecasts on Wednesday, 17th May at 10:00 EDT/15:00 BST. Register here. The demand backdrop for commodities appears weak. While oil …
12th May 2023
OPEC crude oil production declined in April due to export disruptions in Iraq. Production should fall even further in May when OPEC+ output cuts come into effect. Elsewhere, the easing of some US sanctions on Venezuela should mean production there rises …
11th May 2023
Oil demand holding up, but prices likely to remain subdued Today’s stocks report showed a rise in commercial crude inventories last week, confounding analyst expectations of a drawdown. However, total stocks fell, which helps to explain why oil prices …
10th May 2023
China’s commodity imports were generally weak in April. We suspect that import volumes generally could soften a bit further as any reopening effect on commodity demand fades and export demand deteriorates owing to sluggish growth in the rest of the world. …
9th May 2023
Most commodity prices, but especially energy and industrial metals, fell this week. Concern about demand in advanced economies, particularly in the US due to the banking sector problems, contributed to the declines. What’s more, China’s April PMIs …
5th May 2023
Concern about banks and the US debt ceiling will keep the gold price historically high in the next few months. However, once these worries fade, we think that longer-term headwinds will come into play. At around $2,010 per ounce today, the gold price …
The key message from the latest China PMIs is that whilst China’s economy is likely to grow strongly this quarter, momentum is fading. This will be one factor weighing on commodity prices in the near term. China’s Caixin manufacturing PMI fell from 50.0 …
4th May 2023
Tentative signs of weaker demand Commercial stocks continued to fall last week despite lower refinery runs and higher net imports. On the products side, total demand eased back. Of course, one week's data are not sufficient to mark a turning point, but we …
3rd May 2023
Commodity prices generally fell earlier this week on the back of investors’ growing concerns about the outlook for commodities demand. Later in the week, the release of softer-than-expected US Q1 GDP data did nothing to soothe those fears. We expect …
28th April 2023
The global energy market is in the early days of a radical redesign due to the need to cut greenhouse gas emissions. In this Focus , we introduce our long-term energy market forecasts, which are characterised by continued growth in energy consumption and …
27th April 2023
Product demand proving solid, for now Commercial stocks fell last week as production and net imports declined. Meanwhile, product demand remains resilient, but we doubt oil demand can weather the mounting economic headwinds much longer. The EIA’s latest …
26th April 2023
JODI data show that oil demand held up in advanced economies at the beginning of the year. We suspect this won’t last though as weakening economic activity drags on demand over 2023. The data also show that natural gas demand in Europe fell in February, …
In this new quarterly publication, the Capital Economics’ Climate and Commodities teams will track and analyse developments in the transition to a greener global economy. The sharp increases in the lifetime costs of wind and solar projects since 2021 …
After a positive start to the week on the back of China’s strong Q1 GDP data, commodity prices subsequently eased back on expectations of higher interest rates and worries about demand in advanced economies. OPEC+ members may have been left wondering if …
21st April 2023
Supply reviving, but the demand picture remains subdued There were clear signs of a pick-up in global steel production in March, led by China, but output in the EU also ticked up. However, the rise in supply is going hand in hand with increasing stocks. …
Norsk Hydro strikes will weigh on European aluminium output Global production growth y/y slowed in March and came close to stalling. In fact, excluding China, global production growth was 0%. These latest data are consistent with our view that output …
20th April 2023
Crude production approaching peak Sharply higher refining activity and a rise in exports drove commercial crude stocks lower this week. Meanwhile, US production was stable. We think it will only rise a little further by the end of the year. The EIA’s …
19th April 2023
Our in-house demand proxies for industrial metals picked up at the start of 2023, which is consistent with China re-opening and resilient macroeconomic data in most advanced economies. What’s more, we suspect that growth will have accelerated in …
Commodity prices received a boost from expectations that the Fed is nearing the end of its tightening cycle and the weaker US dollar this week, but we think that it is only a matter of time before the economic slowdown we forecast in developed economies …
14th April 2023
Global sugar prices have surged by over 20% since the start of the year as production estimates in several key producers have been downgraded. We think the supply picture is unlikely to change by much over the next months and will keep prices elevated. …
Forecasts unchanged, lower production will support prices Despite justifying its recent production cuts on an uncertain demand outlook, OPEC did not make any changes to its 2023 global GDP or oil demand forecasts in its monthly report for March. We think …
13th April 2023
Although equity and oil prices are usually positively correlated, we think equities will struggle in the next few months and that oil prices will end this year somewhat higher than they are now. We also expect a rebound in equities across the board in …
China’s commodity imports generally rose strongly in March which we think reflects higher demand as a result of the re-opening of the economy. While April data may also be strong, we expect import volumes to soften later in the year as export demand …
Crude exports drop by a record amount Commercial crude stocks rose last week, owing to a record weekly fall in exports and small amounts were sold from strategic reserves. Meanwhile, implied demand for key petroleum products remains healthy for now, but …
12th April 2023
The surprise announcement last weekend by OPEC+ countries that they would make voluntary oil production cuts, even before the OPEC advisory committee met on Monday, pushed oil prices higher by about $5 per barrel. The decision means that the oil market …
6th April 2023
JODI data on global oil and natural gas consumption reveal that global energy demand remained in the doldrums around the turn of the year. We suspect a recovery in natural gas demand is more likely to occur than in oil demand, as prices of the former have …
SPR releases should support commercial stocks in the coming weeks The rebound in crude oil prices is already feeding into wholesale gasoline prices, but we don’t think the increase will be enough to derail demand, which is running at a healthy clip. …
5th April 2023
OPEC+ decision sends oil futures curves into steeper backwardation The surprise OPEC+ decision to cut oil production sent oil futures curves into steeper backwardation. This doesn’t necessarily mean that market participants see prices falling from here, …
The surprise decision by OPEC+ to cut production has meant we have revised up our oil price forecasts for end-2023 and end-2024. This does not materially change our outlook for inflation in advanced economies. And we still think weak economic growth there …
The historic drought afflicting Argentina will cause a steeper contraction in GDP than most expect this year and intensify balance of payments strains by reducing export earnings to the tune of 2-3% of GDP. That will make it hard to meet the IMF’s …
Note: We’ll be discussing the OPEC+ decision and answering your questions in an online briefing at 10:00 EDT/15:00 BST today . Register here . The March PMIs released for China suggest that the reopening rebound is slowing. While there seems further …
3rd April 2023
Yesterday, OPEC+ members announced voluntary cuts to production from May until the end of the year. In total, the cuts amount to 1.16m bpd or about 1.1% of global supply, with Saudi Arabia accounting for the lion’s share of 0.5m bpd. At the same time, …
In the wake of the surprise move by OPEC+ to cut oil production, we held a special online briefing about the decision’s economic and market implications – as well as what this signals about global politics. Economists from across our Macro and Commodities …
Overview – We expect most commodity prices to drift lower in the near term as advanced economies enter mild recessions and financial market risk aversion persists. A stronger US dollar will also weigh on prices. However, later in the year, prices should …
31st March 2023
With the latest shudders in financial markets seemingly contained, most commodity prices ground steadily upward over the week. Oil prices did receive a boost from supply disruptions in Iraqi Kurdistan but, on the whole, a greater appetite for risk drove …
The ongoing rally in the US steel price appears supply-driven and will, most likely, be short-lived. We expect the rally to fizzle out and go into reverse as the US economy slides into recession. The US steel price has continued to climb in recent days, …
30th March 2023
Demand holding up for now, but it may be on borrowed time Commercial crude stocks fell sharply this week as imports fell to a two-year low and refinery activity increased. Meanwhile, product demand continued to expand. As higher interest rates translate …
29th March 2023
Just as it seemed as though stability had been restored in financial markets, a renewed bout of selling of bank stocks took place in Europe this morning. And there are a number of smaller US banks that are still in difficulty. The nervousness has spread …
24th March 2023
The EU’s Net-Zero Industry Act announced last week aims to keep the manufacture of clean technologies within the EU and shows that global fracturing will take place within blocs as well as between blocs over the coming years. But the bigger picture is …
Supply picture improving, but plenty of challenges remain There were a few positive signs in February’s steel production figures; output in China grew healthily and production in advanced economies (DMs) appears to have troughed. However, any rebound in …
23rd March 2023
US natural gas prices have plummeted recently amid subdued demand and elevated stocks. However, demand is expected to revive this year and next, which will put upward pressure on prices. The price of US gas (Henry Hub) has collapsed from a peak of $9.7 …
22nd March 2023
Crude stocks rise again, but it’s the Fed that will move oil prices Commercial crude stocks rose slightly this week, although product stocks fell as domestic demand and exports both picked up. But all eyes are on the Fed’s monetary policy meeting later …
Stripping away calendar effects, global aluminium production increased slightly last month. We expect output to continue to grow steadily this year, mostly in response to rising demand in China. According to the International Aluminium Institute (IAI), …
20th March 2023
While the Credit Suisse rescue might draw a line under that particular institution’s problems, it is clear that confidence in the financial sector overall is still extremely fragile. So regardless of whether more financial institutions run into trouble, …
