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Yesterday’s decision by OPEC+ to cut oil production quotas by 2mn bpd adds to signs that, in a world economy that is fracturing, Saudi Arabia is tilting away from the US and leaning towards a China-led camp. That would threaten to undermine the push by …
6th October 2022
OPEC+ decision adds pressure on the US to increase SPR releases The fall in US commercial crude stocks last week is just one factor pushing the Brent crude price over $93 today, with the other being the decision by OPEC+ to cut its output quota by 2m …
5th October 2022
Having prepped the market well beforehand, OPEC+ announced a 2mn bpd cut to its production quota from November. Of course, given that the group has been producing significantly below its quota, the decline in physical supply will be much less, though …
OPEC+ may announce a major cut to oil production quotas tomorrow. But with the current quota not being met, the actual hit to oil supply will be much smaller. We estimate that a 1m-barrel-per-day (bpd) cut to quotas would translate into a 350,000 bpd …
4th October 2022
The US dollar completed a round trip this week, continuing its relentless rise against most currencies early in the week, but then started to fall back from Wednesday afternoon and is now a touch lower than where it started. Predictably, this weighed on …
30th September 2022
Industrial metals prices rose following the release of the latest survey data on China’s manufacturing sector. But the average of the headline PMIs continued to decline, as did the average of the forward-looking export order PMIs. This suggests to us, at …
With the winter fast approaching and concern about natural gas supply from Russia looming large, we reviewed the relationship between temperature and gas demand in the EU. The key point is that the temperature, whilst important, will be a weaker driver of …
We now expect lower supply of grains over the coming months as the Russia-Ukraine war continues to reduce Black Sea exports and extreme weather conditions mean global stocks have been drawn down. We have therefore revised up our end-year price forecasts, …
29th September 2022
Drop-In: Spotlight – Economic fracturing, commodities and climate change …
Thermal coal prices in Asia rose to record highs in early September and have only fallen back slightly since. This was despite no major supply disruptions and in contrast to falls in other energy prices in Asia and Europe. It appears that demand for coal …
Rebound in implied demand likely to prove short-lived US commercial crude stocks fell slightly for the first time in four weeks, while product stocks decreased much further. The latter was mostly owing to the sharp increase in product demand. But we doubt …
28th September 2022
With the global electronics sector struggling and the more general global economic backdrop deteriorating, we think the silver price will remain under pressure over the rest of this year. The silver price has fallen fairly consistently over the past six …
27th September 2022
Most commodity prices plunged this week on the back of monetary tightening by many major central banks, including the Fed, and an appreciation of the US dollar. There is still considerable uncertainty about the scale of the global economic downturn, but …
23rd September 2022
Supply ticked up, but the bigger picture is of weak steel output A pick-up in supply from China boosted global steel production in August. However, with economic activity starting to slow and high energy costs across the world, the outlook is for steel …
22nd September 2022
High export demand is boosting refinery activity US commercial stocks rose for the third successive week in part due to a bounce back in imports, but also subdued domestic demand. The backdrop of rising interest rates and still-high prices suggest that …
21st September 2022
The supply outlook continues to worsen Global aluminium production rose at a slightly faster pace in August than in July, as Chinese production picked up and helped to compensate for a steeper reduction in European output. However, it looks as though …
20th September 2022
Most commodity prices have struggled to make gains since the US August CPI data were published on Tuesday. The unexpectedly strong reading prompted a rise in Treasury yields and US dollar appreciation, both of which are negatively correlated with …
16th September 2022
Overview – Energy prices have been falling recently as concerns about weaker demand took centre-stage, but we expect constrained supply to put a floor under prices in the coming months. By contrast, we expect industrial metals prices to fall further given …
14th September 2022
US demand to remain subdued for some time yet US commercial stocks rose, despite a fall in net imports and a rise in refinery activity. Although export demand remains strong, domestic demand is weak, probably reflecting falling real incomes. The EIA’s …
OPEC expects to have to raise supply in 2023 OPEC’s latest report shows that most producers raised oil output in August, but the gap between targeted production and actual production widened. OPEC also looks optimistic on oil demand to us, which might …
13th September 2022
Energy markets took centre stage this week as demand concerns outweighed supply concerns, dragging prices down. Even the decision by OPEC+ on Monday to cut oil output quotas for October by 100,000 bpd failed to prevent the Brent crude oil price sliding …
9th September 2022
Europe’s scramble to replace Russian oil has left the price of Brent crude trading at a substantial premium to WTI for most of this year. But we expect this premium to narrow in 2023-24 as low US stocks and high US exports boost the WTI crude price and …
Commercial stocks will remain low for some time US commercial crude oil stocks rose last week for the first time in four weeks, as imports increased while exports and refinery usage fell. But stocks will probably continue to remain at still-low levels for …
8th September 2022
We don’t think Europe will be forced to widely ration natural gas this winter because the sky-high price should attract sufficient LNG from abroad to replace reduced imports from Russia, whilst also weighing on demand. However, we do see a few risk …
Commodity import volumes generally held up well in August, with the exception of crude oil imports. As long as China continues with pandemic-related lockdowns, oil demand is likely to remain weak. China’s export growth came off the boil in August, falling …
7th September 2022
OPEC+ announced a 100,000-barrel per day cut to production in October at its regular monthly meeting today. The cut is not a complete surprise as there have been mutterings for a few weeks, notably from the Saudi energy minister, Abdulaziz bin Salman al …
5th September 2022
Growing fears about demand hit all commodity groups hard this week as China tightened restrictions in response to renewed virus outbreaks. Energy prices took a big leg down from their highs reached last week , particularly natural gas, despite gas flows …
2nd September 2022
The latest manufacturing PMIs out of China and emerging Asia point to a worsening demand outlook for commodities, but especially industrial metals . This adds weight to our view that industrial metals prices could fall further, although high production …
1st September 2022
Commercial stocks could have further to fall US commercial crude oil stocks fell last week for the third week running, despite another release from strategic reserves. We think commercial stocks will remain under pressure over the coming weeks, …
31st August 2022
A revived Iran nuclear deal would quickly bring an additional 1mn bpd of crude oil production online, which would directly weigh on global oil prices. But the bigger impact would be to make it less likely that supply cuts from OPEC+ would be used to …
We’ve raised our near-term natural gas and coal price forecasts across the board this week to account for the recent slump in Russian natural gas exports to Europe, the likelihood that those exports will remain low, and the knock-on effect that higher gas …
26th August 2022
Demand indicators remain volatile, but point to some softness US commercial crude stocks fell again this week, despite a chunky release from the strategic reserve. Elsewhere, there was a large weekly decline in implied product demand. It appears that the …
24th August 2022
One left-field option for alleviating Europe’s gas crisis that has been doing the rounds is the potential for asking Norway to discount the price of its gas exports. This Update looks at eight key questions on the topic. In short, an agreement would …
We forecast palladium demand to pick up slightly over the next two years, while supply growth is set to remain muted, keeping the market in a deficit throughout. Continued drawdowns of stocks over that period therefore make it likely that prices, …
We have revised up our forecasts of the European natural gas price due to the scale of Russia’s supply cuts and the likelihood that these are permanent. Prices should ease back in 2023 as Europe imports more LNG and demand falls, but we think they will …
Production stuck in low gear Global steel production fell at a faster pace in July. The latest data are broadly consistent with our view that supply will fall this year, which should put a floor under prices even with soft demand . The World Steel …
23rd August 2022
The supply outlook has deteriorated Global aluminium production rose at a slightly slower pace in July, mostly because production in North America fell at a faster clip, while output in Europe continued to slump. Production growth could slow further this …
22nd August 2022
It was another week of soaring natural gas prices as LNG demand from Asia appears to have picked up and the energy crisis in Europe deepens by the day . Ultra-dry and hot weather across Europe is creating problems with Norway’s hydropower and France’s …
19th August 2022
Signs of stronger demand failing to lift prices The large fall in US commercial crude stocks was mostly due to a renewed rise in exports. Implied gasoline demand rose for a second consecutive week, but this failed to lift prices amid growing concerns over …
17th August 2022
This week the prices of most commodities got a boost as investors pared back expectations for rate hikes in the US , following lower than expected inflation data. That said, we still expect a further small rise in the US 10-year Treasury yield by the end …
12th August 2022
More of the same OPEC’s monthly report for August showed that the group continues to produce significantly less than its quota and we expect this trend to continue in the coming months. OPEC is clearly worried about demand due to the economic slowdown, …
11th August 2022
Lower prices are boosting gasoline demand The rise in US crude stocks was in large part down to a drop in exports. More interesting was the jump in implied gasoline consumption, which probably reflects the recent fall in prices. This may not be …
10th August 2022
Deteriorating global economic growth over the coming quarters will weigh on industrial demand for cotton, natural rubber and lumber. That said, high oil prices will offer some support to cotton and natural rubber prices, and our expectation for rate cuts …
With Russia tightening its squeeze on supply of gas to Europe, governments are turning their attention to other major gas exporters such as Qatar to try to fill the gap. But Qatar’s gas sector is already operating close to capacity and, while the North …
9th August 2022
Commodity import volumes remained lacklustre in July , consistent with subdued activity in heavy industry and construction. We think import growth should tick up in the coming months in response to higher infrastructure spending and a modest pick-up in …
8th August 2022
Concerns about the demand outlook have dragged the Brent crude oil price towards $90 per barrel this week. But, the supply-side concerns which pushed the price over $120 per barrel not too long ago haven’t entirely vanished. Indeed, following the OPEC+ …
5th August 2022
In a week of relative financial market calm, there was a pause in the large, sentiment-driven swings that have characterised most commodity prices in recent weeks . Instead, prices seemed to take direction from more fundamental drivers. That said, the …
Commercial stocks rise, but scope for further increases is limited Crude oil prices have been for a rollercoaster ride today, rising by $3 per barrel following the OPEC+ meeting, and then more than erasing those gains later on. Prices fell particularly …
3rd August 2022
Having fallen sharply in Q2, we think that the gold price is now close to a cyclical trough. What’s more, the price should revive a little in 2023 as markets factor in the prospect of US monetary tightening . We always expected the price of gold to fall …
