OPEC gives a boost to prices in the near term
The 1.2m bpd output cut announced by OPEC and its allies today should absorb much of the oil market surplus in the short term. As such, it has sparked a rally in oil prices and in commodities more generally. However, we still expect burgeoning supply from the US and soft demand globally to cause oil prices to drop back in 2019. What’s more, the expected decline in oil prices next year will lower production costs for many other commodities, putting more general downward pressure on prices.