Oil will be scarcer than previously expected

The surprise announcement last weekend by OPEC+ countries that they would make voluntary oil production cuts, even before the OPEC advisory committee met on Monday, pushed oil prices higher by about $5 per barrel. The decision means that the oil market will be tighter than we had expected this year and next, so we raised our end-2023 and end-2024 price forecasts to $90 pb and $80 pb, respectively.

Commodity prices will be driven by macroeconomic data releases over the next week (all covering last month). We think the US employment report due tomorrow will show a moderation in non-farm payroll growth. If we’re right, commodity prices, especially precious metal prices, could rise on lower interest rate expectations. Similarly, if the US inflation data due next week show a further cooling in price pressures in March, then prices may go up. Meanwhile, China should release trade data on Thursday. We expect a deeper y/y contraction in exports in March, but there will likely have been a modest recovery in imports.