Skip to main content

Commodities caught in a tug of war

This week, commodity prices continued to be caught in the middle of an ongoing tug of war between tight supply and deteriorating demand. We ultimately expect that to play out in two different ways over the rest of this year. On the one hand, the deficit in the oil market in Q4 of this year will, in our view, cause oil prices to edge higher. On the other, sluggish economic growth in China and a downturn in global manufacturing will probably extend the slide in industrial metals prices.

China will take centre stage in commodity markets next week. The 20th Party Congress begins over the weekend, but any developments are likely to fall short of easing investors’ worries around commodities demand. It is unlikely that policymakers will reverse course on the zero-COVID strategy or for any major stimulus to be announced. Meanwhile, there is a raft of key data due to be released, including GDP and activity data, which we expect to show the economy was little changed from its Q1 level.

We will also hold the next of our Spotlight discussions next week. This will be on the implications of the fracturing of the global economy for key commodities. (Clients can register here.)  

Become a client to read more

This is premium content that requires an active Capital Economics subscription to view.

Already have an account?

You may already have access to this premium content as part of a paid subscription.

Sign in to read the content in full or get details of how you can access it

Register for free

Sign up for a free account to gain:

  • Unlock additional content
  • Register for Capital Economics events
  • Receive email updates and economist-curated newsletters
  • Request a free trial of our services


Get access