Vaccine poses upside risk to forecasts

Commodity prices benefitted from news of a potential vaccine for COVID-19 this week. The resulting boost to risk appetite pushed equities and most commodity prices higher, with the exception of precious metals. That said, while a vaccine points to generally stronger commodities demand, there is still considerable uncertainty over the production and distribution of any vaccine. Nevertheless, the risks to our industrial commodity price forecasts now lie to the upside. Markets will be looking forward to the release of China’s activity data next week. We suspect that the data will show continued strength in industrial production in October, which will support industrial metals prices. Markets will probably also be keeping a close eye on the number of new confirmed cases of COVID-19 in the US. If the ongoing rise leads to additional containment measures, oil prices may fall back.