Commodity markets have been relatively quiet ahead of the G20 meeting (this weekend) and OPEC meetings (Monday and Tuesday). Investors are optimistic that a truce on trade will be agreed when President Trump meets President Xi at the G20. As such, if there is no progress, commodity prices will probably fall. Meanwhile, the oil market will be more focussed on the outcome of the OPEC meetings. We expect OPEC and its allies to decide to continue with production restraint. However, the group could announce deeper output cuts, which should give a lift to oil prices.
Next week is also busy on the data front. However, we think that most of the indicators will point to weaker commodity demand, which will weigh on prices. We suspect that China’s unofficial June PMI (Monday) will show a further loss of momentum in the manufacturing sector and that the US June ISM index (also Monday) and non-farm payrolls figures (Friday) will be subdued.
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