Limited upside in commodity prices

by: Hans van Cleef , Georgette Boele , Casper Burgering

Since the start of 2019, the CRB index has rallied by 7% in line with a recovery in oil and most base metal prices.

Hopes that China and the US may come to a deal on the trade front have continued to be supportive for commodity demand expectations (mainly base metals, steel and oil).

For the coming months we expect some more upside for commodity prices (CRB Index forecast +4% in 3 months). However, since we recently lowered some of our growth expectations, the upside potential may be not as big as anticipated earlier.

A large share of the expected performance of the CRB index should come from the energy sector. And although we expect prices to rise further in our base case scenario, the final result is uncertain. Gas prices are strongly affected by hard-to-predict weather patterns, while oil prices may be capped by lower economic growth (less demand) and abundant supply.

Monthly-Commodity-Insights-Feb-2019.pdf (1 MB)