The energy crisis is over, but prices to stay elevated

We expect most commodity prices to drift lower in the near term as advanced economies enter mild recessions and financial market risk aversion persists. A stronger US dollar will also weigh on prices. However, later in the year, prices should start to revive as the US Federal Reserve and central banks in many emerging economies start to cut interest rates, which will prompt optimism about a pick-up in economic activity and commodity demand. What’s more, while growth in China's economic activity may have peaked in Q1, we expect its residential property sector to revive a little in the second half of this year, which is positive for metals prices.

We think the worst of the energy crisis is now behind us, but we still think that most energy prices will rise a little in the run-up to the 2023/24 winter as supply will remain relatively constrained. We forecast that energy prices will fall more markedly in 2024 as supply bottlenecks ease and China’s economy slows.