It was a fairly quiet week in commodities markets, although oil prices rose on concerns about earthquake-related disruption to exports from the Turkish port of Ceyhan and Russia’s announcement of a 0.5m bpd cut to production in March. By contrast, the prices of most base metals fell. We had cautioned that the rally in January was a little premature and overdone given that China’s property sector remains in the doldrums for now and that industrial activity had been relatively resilient throughout the pandemic.
Turning to next week, the focus of investors is likely to be on US inflation and activity data. We think that inflation will fall by more than the consensus, which should give a lift to commodity prices as it will allay fears of a more hawkish Fed and higher US interest rates for longer.
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