Bear market in oil to persist in 2019

The price of oil (Brent) has dropped by around a fifth from its October peak and we expect it to continue to fall to $60 per barrel by end-2019. Supporting this view is our forecast that the oil market will be in a small surplus next year, an assessment that may well be shared at this weekend’s meeting of the JMMC (Joint OPEC-Non-OPEC Ministerial Monitoring Committee) and in OPEC’s next monthly report, to be released on Tuesday. Elsewhere, China’s November data for industrial production, fixed asset investment and retail sales (Wednesday) could set the tone in metals markets. We suspect that growth in real estate investment slowed but that infrastructure spending rebounded, from a low level, fuelled by looser fiscal policy. Overall, we think that any stimulus will only serve to stabilise, rather than boost, Chinese metals demand growth.