Slew of positive data gives fresh fuel to price rally

Most commodity prices rose this week following a batch of positive economic data releases. Oil prices were up particularly strongly on the back of a larger-than-expected weekly decline in US crude stocks and an upward revision to the International Energy Agency’s demand forecasts. We expect oil prices will rise further in the months ahead as the rollout of vaccines and relaxation of virus-related restrictions prompts a leg-up in demand. Industrial metal prices also rose on the week, aided by trade data out of China which revealed a renewed surge in commodity imports. However, the GDP data released today showed that economic growth in China slowed in Q1 compared to Q4, and we think it will continue to soften in the quarters ahead, which underpins our forecast that industrial metals prices will end the year lower. Next week brings a flurry of PMI data for April on Friday. The euro-zone data are likely to show that the recent reimpositions of virus-related restrictions are weighing on economic activity there while the US data are likely to point to a further acceleration in activity, which would be in line with our view that weaker oil demand in Europe will be largely offset by a stronger rebound in consumption in the US and elsewhere. Otherwise, we will be publishing our latest Commodities Overview Outlook, which will flesh out our forecasts in more detail (including pushing our forecast horizon for prices out to 2023).