News of a record 9.7m bpd cut to output by OPEC and its allies failed to prop up oil prices, which fell again this week. As long as virus-containment measures continue to depress demand, we expect oil prices to remain low. By contrast, signs that activity is starting to recover in China was probably a factor boosting the prices of industrial metals. However, domestic demand in China remains below its pre-virus level and export demand will suffer given the lockdowns across much of the rest of the world. As a result, we are not expecting a sustained rally in industrial commodity prices any time soon.
Turning to next week, the spread of the virus and its negative implications for economic activity will continue to be the key driver of commodities prices. Flash Markit PMIs for the US and EU are scheduled to be published next week and will give us some indication of the scale of the downturn in activity.
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