The prices of most commodities prices rose this week, as signs emerged that developed economies may be past the worst of the initial economic hit from the coronavirus. Stronger-than-expected US employment data and Chinese PMIs and additional monetary easing by the ECB all served to bolster sentiment towards risky assets, including equities and commodities, this week. Going forward, as economies re-open worldwide, we expect commodities prices to continue to make up lost ground.
Turning to next week, OPEC+ is now expected to meet ahead of schedule. We think that it will agree to extend its current 9.7m bpd oil production cut for at least another month. However, we think this is largely factored into prices. Meanwhile, on the data front, China’s trade and activity data for May will be released next week, which will help investors assess the speed of China’s recovery. Commodity imports are likely to have been strong given the pick-up in credit growth and infrastructure-related spending.
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