Oil to outperform in 2021

In a reversal of the trend in 2020, we expect oil prices to rise this year and the prices of industrial metals and agriculturals to fall. We suspect that oil demand, particularly in developed economies, could surge in the second half of the year as the vaccine rollout enables the travel and hospitality industries to re-open. In contrast, demand for industrial metals is likely to falter later in the year as China withdraws its policy stimulus and growth in the electronics sector slows. Meanwhile, we expect the supply of agriculturals to improve this year as the La Niña weather phenomenon fizzles out and lockdown measures are eased, allowing access to a larger labour pool. And finally, we are cautiously positive on the price of gold as US interest rates are set to remain at ultra-low levels and real yields could slip on the back of resurgent inflation expectations.