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The surprise decision by OPEC+ to cut production has meant we have revised up our oil price forecasts for end-2023 and end-2024. This does not materially change our outlook for inflation in advanced economies. And we still think weak economic growth there …
5th April 2023
The historic drought afflicting Argentina will cause a steeper contraction in GDP than most expect this year and intensify balance of payments strains by reducing export earnings to the tune of 2-3% of GDP. That will make it hard to meet the IMF’s …
Note: We’ll be discussing the OPEC+ decision and answering your questions in an online briefing at 10:00 EDT/15:00 BST today . Register here . The March PMIs released for China suggest that the reopening rebound is slowing. While there seems further …
3rd April 2023
Yesterday, OPEC+ members announced voluntary cuts to production from May until the end of the year. In total, the cuts amount to 1.16m bpd or about 1.1% of global supply, with Saudi Arabia accounting for the lion’s share of 0.5m bpd. At the same time, …
In the wake of the surprise move by OPEC+ to cut oil production, we held a special online briefing about the decision’s economic and market implications – as well as what this signals about global politics. Economists from across our Macro and Commodities …
Overview – We expect most commodity prices to drift lower in the near term as advanced economies enter mild recessions and financial market risk aversion persists. A stronger US dollar will also weigh on prices. However, later in the year, prices should …
31st March 2023
With the latest shudders in financial markets seemingly contained, most commodity prices ground steadily upward over the week. Oil prices did receive a boost from supply disruptions in Iraqi Kurdistan but, on the whole, a greater appetite for risk drove …
The ongoing rally in the US steel price appears supply-driven and will, most likely, be short-lived. We expect the rally to fizzle out and go into reverse as the US economy slides into recession. The US steel price has continued to climb in recent days, …
30th March 2023
Demand holding up for now, but it may be on borrowed time Commercial crude stocks fell sharply this week as imports fell to a two-year low and refinery activity increased. Meanwhile, product demand continued to expand. As higher interest rates translate …
29th March 2023
Just as it seemed as though stability had been restored in financial markets, a renewed bout of selling of bank stocks took place in Europe this morning. And there are a number of smaller US banks that are still in difficulty. The nervousness has spread …
24th March 2023
The EU’s Net-Zero Industry Act announced last week aims to keep the manufacture of clean technologies within the EU and shows that global fracturing will take place within blocs as well as between blocs over the coming years. But the bigger picture is …
Supply picture improving, but plenty of challenges remain There were a few positive signs in February’s steel production figures; output in China grew healthily and production in advanced economies (DMs) appears to have troughed. However, any rebound in …
23rd March 2023
US natural gas prices have plummeted recently amid subdued demand and elevated stocks. However, demand is expected to revive this year and next, which will put upward pressure on prices. The price of US gas (Henry Hub) has collapsed from a peak of $9.7 …
22nd March 2023
Crude stocks rise again, but it’s the Fed that will move oil prices Commercial crude stocks rose slightly this week, although product stocks fell as domestic demand and exports both picked up. But all eyes are on the Fed’s monetary policy meeting later …
Stripping away calendar effects, global aluminium production increased slightly last month. We expect output to continue to grow steadily this year, mostly in response to rising demand in China. According to the International Aluminium Institute (IAI), …
20th March 2023
While the Credit Suisse rescue might draw a line under that particular institution’s problems, it is clear that confidence in the financial sector overall is still extremely fragile. So regardless of whether more financial institutions run into trouble, …
Commodity markets were not spared the effects of widespread turmoil in the global banking system. Most prices ended the week lower as investors fled risky assets. The gold and silver prices bucked this trend and surged higher; unsurprising in a week …
17th March 2023
While commodity prices have also been caught up in the chaos stemming from the banking sector turmoil, so far the impact hasn’t been too alarming as price falls for most commodities haven’t been overly large. Where those falls have been greatest, such as …
Commodity prices have tumbled as concern about a banking crisis has grown. The downside risks to our forecasts, which we recently attributed to higher interest rates, now include banking sector stress. There has been a renewed fall in commodity prices …
16th March 2023
Crude stocks rise, but all eyes are on the banks Commercial crude stocks rose this week, but product stocks fell. That said, the bigger picture remains one of subdued domestic demand, which we expect to remain the case for some time yet. After a dip in …
15th March 2023
The fracturing of strategic supply chains into US and China trade blocs threatens Australia’s existing significant trade with China but also presents Australia with an opportunity to align its trade relationships with its existing security …
OPEC sticks together and will keep output constrained OPEC’s monthly report for March noted that the group has stuck to the production targets agreed in October last year. Accordingly, we have revised down our forecasts for the group’s output in 2023. The …
14th March 2023
The restoration of diplomatic ties between Saudi Arabia and Iran adds to signs that geopolitical tensions in the Middle East are easing, which may help to reduce risk premia in financial assets in the region as well as the oil market. Tensions will not …
13th March 2023
Even though US non-farm payrolls increased by 311,000 in February, the report contained signals that were consistent with slowing inflation, prompting a fall in US interest rate expectations today. Despite this, commodity prices are still broadly down on …
10th March 2023
Demand growth for industrial metals slowed to a halt at the end of last year. Even with some more recent improvements in advanced economy activity growth, metals demand probably kicked off the year on a weak note. Coupled with the prospect of “higher for …
9th March 2023
Commercial crude stocks fell for the first time in nine weeks last week, while implied product demand dropped. We think oil demand will remain soft as higher interest rates drag on economic growth. The EIA’s weekly US Petroleum Status Report showed that …
8th March 2023
JODI data on global oil and natural gas consumption show that global energy demand was weak in late 2022. China’s rapid reopening will likely boost demand for both. But plenty of downside risk remains. Advanced economies are either in the midst of a sharp …
The National People’s Congress (NPC) reports struck a cautious note on the outlook for economic activity in China this year. Fiscal stimulus will be limited and efforts to prevent “disorderly” expansion in the property sector are to continue. That said, …
Higher rate expectations drag many commodity futures curves lower Most commodity prices fell and futures curves shifted lower this past month as higher interest rate expectations in advanced economies clouded the demand outlook. This is consistent with …
7th March 2023
China’s imports were weak in January-February, but commodity imports fared better. What’s more, we think crude oil imports, in particular, will pick up from here given the resurgence in travel demand. China’s January-February trade data (published today) …
It was another fairly quiet week in commodity markets, with prices caught between diverging narratives. Rather perversely, robust economic data in advanced economies weighed on commodity prices. This is due to expectations that economic resilience will …
3rd March 2023
Overview – We think prices will drop a little further in the coming months as economic slowdowns in advanced economies weigh on commodities demand, even as China’s economic recovery takes hold. However, the prospect of a higher for longer Federal Funds …
2nd March 2023
US crude exports could rise even further Commercial crude stocks rose only slightly this week but this was despite a jump in US crude exports to a new record. With US domestic fuel demand unlikely to surge anytime soon, crude exports should remain …
1st March 2023
The February PMI data out of China suggest economic growth is rebounding rapidly. While growth should moderate over the second half of year, it still points to higher metals and crude oil demand. Overall, the PMI surveys suggest that the risks to China’s …
It has been a tumultuous year since the outbreak of war in Ukraine. Energy markets are still in a state of flux, though they have calmed significantly. (The prices of European gas and Brent crude have fallen ~85% and ~35% from their respective peaks.) …
24th February 2023
Commercial crude oil stocks set to rise even further There was another strong rise in commercial crude stocks last week. With little prospect of any upturn in domestic demand anytime soon, commercial stocks should continue to rebound in the coming months. …
23rd February 2023
We don’t think that the election in Nigeria on Saturday will lead to a sudden improvement in crude oil production. The oil industry’s challenges in the country are too deep-seated. But the long-awaited Petroleum Industry Bill, passed in 2021, could at …
22nd February 2023
The war in Ukraine. Ageing populations. Rising temperatures. Investors are having to grapple with a formidable range of uncertainties around the long-term outlook for the global economy and markets. Their challenge is compounded by the fracturing of the …
We expect the wheat price to remain high this year as events in Ukraine and drought in other key producers hurt supply. Although the wheat price should drop back after this, the worsening impacts of climate change will put prices back on an upward trend …
Global steel output remained depressed in January and is unlikely to pick up markedly in the coming months. However, a rebound in China’s demand and lower power costs in Europe should prompt some recovery in supply later in the year. The World Steel …
The sharp fall in European electricity prices sets the stage for a recovery in metals output across the region. As power prices are still historically high and unlikely to fall that much further, however, the potential for a full and rapid recovery is …
Aluminium production to slowly increase this year Global aluminium production fell slightly in January compared to December, although the bigger picture is one of fairly steady production since the middle of last year. We expect production to respond to …
20th February 2023
Most commodity prices fell this week (1 & 2) due to concerns about the persistence of high inflation in the US. Data showed US CPI inflation coming in slightly stronger than expected in January, pushing up interest rate expectations and giving a boost …
17th February 2023
Russia’s crude oil production has, up until now, been remarkably resilient in the face of Western sanctions. But the recent announcement of a voluntary cut seems to be the first concrete sign that Russia is concerned about its ability to maintain output …
A combination of higher interest rates and rising raw material prices have interrupted the long-term declines in the costs of renewables and battery power, and could push costs up further in the near term. However, such pressures will dissipate as policy …
16th February 2023
Commercial crude oil stocks looking healthy Commercial crude stocks rose to their highest since June 2021 last week due to lower refinery activity. With crude demand likely to remain sluggish over the coming months, and the US government set to sell …
15th February 2023
Anecdotal reports and high frequency data suggest that ongoing civil unrest in Peru is beginning to choke off activity at key copper mines. But, if recent history is anything to go by, output can rebound rapidly so long as any closures are brief. The …
Output still below quota, demand will be key OPEC’s monthly report for February did not make any major revisions to its forecasts. That said, the group is clearly worried about both the outlook for global demand and supply from Russia. We think OPEC is …
14th February 2023
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 …
10th February 2023
Refinery activity to remain subdued this quarter Commercial crude stocks rose again this week, despite a rise in inputs to refineries. That said, refinery activity is unlikely to pick up markedly in the coming weeks given ongoing maintenance and only …
8th February 2023
