Energy prices surge as rally looks overdone

Commodity prices generally rose this week, but especially energy prices, which continued to surge on constrained supply, unseasonably high demand and low stocks. That said, we think the supply shortfalls will prove temporary and expect energy prices to come off the boil next year. By contrast, most metals prices were largely down this week, as Chinese PMI data indicated subdued demand. What’s more, those PMIs did not factor in recent power constraints. Weighing on all commodity prices this week was a strengthening dollar, with the US Dollar Index (DXY) hitting a one-year high. OPEC+ meets next Monday to review its output policy. We already forecast a large rise in OPEC+ oil production next year as the group winds down its earlier output cuts, but there have been growing calls for an even faster unwinding, which would weaken oil prices. Elsewhere, we expect stronger US non-farm payroll numbers for September (Friday), which would support commodity prices.