Commodities Outlook: Economic Forces at Play

December 15, 2023 11:21 AM UTC

•    Oil: Production Cuts and Demand DynamicsThe trajectory of oil prices will be significantly shaped by both the production policies to be adopted by OPEC and the global economic growth. In light of the voluntary cuts agreed upon by several countries within the cartel during the November 202

Commodities Outlook: Rising Tides

September 27, 2023 8:26 AM UTC

Oil: Shifting Dynamics in 2024
Delving into next year’s oil outlook, we expect Saudi Arabia’s voluntary cuts and Russia’s export curbs to be lifted during the first quarter of 2024. Likewise, in our baseline scenario, we consider the possibility of OPEC+ to slowly start reversing its production

Indonesia's Narrowing Surplus Weighs on IDR

August 18, 2023 9:54 AM UTC

Figure 1: Indonesia Trade Balance (USD bn)
Source: Datastream
Shifting Trade Dynamics 
Export performance has been a key driver behind the dwindling trade surplus. The data revealed that exports fell by 18% y/y, largely in line with our expectations. Notably, coal exports plummeted by 46.1% y/y, as de

Indonesia's Q2 2023 Growth Beats Expectations; Promising Outlook

August 9, 2023 12:37 PM UTC

Figure 1: Indonesia GDP growth (%)
Source: Badan Pusat Statistik
According to data from the Central Statistics Agency (BPS), GDP growth accelerated from 5.04 y/y in Q1 to 5.17% y/y in Q2. Furthermore, the economy rebounded on a quarterly basis, expanding by 3.86% q/q, recovering from a 0.91% q/q contr

Navigating the Path to Peace: Saudi Talks on Ukraine-Russia Conflict

August 7, 2023 10:59 AM UTC

Saudi plays peacemaker
The goal of the meeting in Jeddah this weekend was to discuss and potentially agree upon essential principles that could pave the way for a peaceful end to the conflict in Europe. Saudi brought together several stakeholders with diverse interests and perspectives on the conflic

Russia’s Withdrawal from Black Sea Grain Deal

July 25, 2023 4:13 PM UTC

The Black Sea grain deal expired as of July 17 as Russia announced its decision not to extend it, arguing that Russia’s requests on removing obstacles to Russian agricultural exports was never fulfilled, and the grain exported from Ukraine (which were meant to be shipped to poor countries) headed

Commodities Outlook: Navigating Uncertainty

June 20, 2023 8:37 AM UTC

Figure 1: U.S. Crude Oil Stocks (Million Barrels)
Source: EIA / Continuum Economics
Oil: Negative Sentiments Leading the Market
Demand concerns are the leading factor influencing short-term projections of oil prices. We see three determinants of a downward revision in oil consumption for the second ha

April 14, 2023 7:43 AM UTC

Figure 1: Iran and Saudi Arabia GDP forecasts
Source: IMF 
Foreign ministers have already meet in Beijing in early April and Iran’s President Raisi is planning a trip to Saudi Arabia. Saudi Arabia’s motivation is to promote regional peace, which in turn will help foreign funding to the vision 203

Commodities Outlook: Slowdown Then Recovery

March 24, 2023 8:37 AM UTC

Figure 1: OECD Crude Oil and Other Liquid Inventories (Mln Barrels per Day)
Source: IEA 
Oil: Demand but Then Supply Worries 
The factors affecting the 2023 forecast for global oil demand have become more volatile over the last three months. This volatility is due to a combination of factors, includi

MENA: Playing Both Sides

January 11, 2023 8:36 AM UTC

 Most Middle East Countries have stayed neutral on the Ukraine war except for Iran and Syria who supported Russia, but could geopolitics evolve and see countries taking sides? 
Figure 1: Proven Gas and Oil Reserves (% of Middle East Total)
Source: BP Statistical Year Book 2021 
Ukraine War
Iran suppl

January 6, 2023 11:16 AM UTC

Figure 1: Non Commercial Net Longs for WTI (000)
Source: Bloomberg/Continuum Economics 
Bears Demand Concerns
Financial market participants are have been selling oil, as part of the concerns on the global economy slowdown for 2023 and expectations that it will hit oil demand. CFTC Net longs from non-c

UK: Short-term Relief for Households and Businesses, but Long-term Gas Addiction

September 8, 2022 12:32 PM UTC

Headlines Rather than Details
Although details of the emergency package are far from complete, with more minutiae such as the overall costs coming later this month, the broad picture chimes with the most recent speculation save for the inclusion of a temporary suspension of green levies. Most notably

Asia Turns to Coal, Away from Gas, and Long-Term to Renewables and Nuclear

September 7, 2022 3:24 PM UTC

Figure 1: Asia Electricity Production Relies on Coal (% by source)
Source: BP, Continuum Economics
Asia Coal Away from Gas
Two key influences are impacting the feed-through of the energy shock to Asia. Firstly, though Asia like Europe largely imports gas, Asia uses less natural gas than other regions

Energy War and European Markets

September 5, 2022 1:21 PM UTC

Market Implications: Market expectations that the ECB will lift the deposit rate to 2% by early 2023 look overdone, as a EZ recession will reduce underlying inflation pressures; labor market flexibility avoids a EZ wage inflation problem and the Euro will likely avoid a downward spiral as fiscal sup

Electric Shock for European Leaders

August 26, 2022 9:33 AM UTC

Figure 1: TTF Gas Prices and German Electricity Prices (Aug. 24, 2021 = 100)
Source: Bloomberg, Continuum Economics
Electricity Price Surge for Industry and Households
European industries are starting to balk at the huge surge in electricity prices now and in the near future (Figure 1), with intensiv

Russia Bears the Cost of Extended War — for Now

August 25, 2022 3:14 PM UTC

Figure 1: Russia Quarterly GDP, y/y
Source: Bloomberg, Continuum Economics
Russia's invasion of Ukraine may have been based on an assumption of Kyiv falling quickly and an easy victory. While this brings into daylight the poor planning and preparation going into the campaign, the Russian economy has w

Gas Price Surge on New Russia Supply Threats

August 22, 2022 2:03 PM UTC

Figure 1: Europe and Japan/South Korea Gas Prices (Dec. 31, 2021 = 100)
Source: Datastream
Russia Supply Problems into the Autumn
Russia has announced a 3-day shutdown of Nord Stream 1 from Aug. 31, which has sent European gas prices surging as worries grow that the shutdown could be extended or tha

Oil Prices: Recession Headwinds

August 11, 2022 12:39 PM UTC

Figure 1: WTI Net Non-commercial Future Positions
Source: CFTC
Various Factors Take the Steam Out of Oil
A number of factors are leading to our downward revision of the WTI oil price outlook.
Figure 2: OECD Oil Inventories in Number of Days
Source: U.S. EIA
Nevertheless, we do see oil prices rising in

U.S. Inflation Reduction Bill: Little Macro but Helping Climate Change Fight

August 8, 2022 3:54 PM UTC

Figure 1: Historical and Modeled Net U.S. Greenhouse Gas Emissions (billions metric tonnes CO2 equivalent)
Source: Rapid Energy Policy Evaluation Tool Kit (REPEAT here)
Little Inflation or Macro, More Reducing Climate Emissions
The Inflation Reduction Act of 2022 will likely have little impact on ne

EU Agrees Voluntary Demand Cuts, but Gas Prices Will Remain Sky High

July 26, 2022 3:06 PM UTC

Figure 1: European and U.S. Gas Prices
Source: Datastream
EU member states have agreed to a voluntary plan to cut gas demand by 15% (here). While the plan has plenty of loopholes to provide flexibility across the EU, political and economic momentum will likely follow through at a national level to re

Ukraine War Scenarios: Long war, Exhaustion or Cyberattack

July 22, 2022 12:58 PM UTC

Figure 1: Possible Scenarios
Source: Continuum Economics.(1) Other scenarios would be a remaining 10% including a double cold war with China and Russia versus the west; Putin stepping down or dying or a successful Ukraine counter offensive that reclaims a fair portion of lost territory.
2 Main Scenari

Supply and Labor Problems: Easing or Persisting?

July 15, 2022 1:38 PM UTC

Figure 1: NY Fed Global Supply Chain Pressure Index
Source: NY Fed
Some Easing of Supply Concerns
The COVID pandemic and Ukraine war have caused persistent supply chain and labor market problems, but how are these changing during 2022? A range of data points to an easing of pressures, but others are

Germany’s Gas-induced Downside Risks Specified

July 12, 2022 1:52 PM UTC

Figure 1: ZEW Expectations Back to Pandemic Lows
Source: ZEW, % balance
A Different Kind of Pipeline Pressure
Given that Russia has significantly reduced its deliveries to Germany, natural gas is likely to become scarcer in the coming winter, especially if the current (maintenance-induced) stoppage in

July 5, 2022 12:50 PM UTC

Figure 1: Grains Prices (Jun 2005 = 100)
Source: Datastream, Continuum Economics
Grain Price Relief
Grain prices have fallen in recent weeks (Figure 1), as concerns about a U.S. recession have caused a change in sentiment in commodity markets, with a decline in oil and copper prices also being eviden

Russia Defaults on External Debt: So What?

June 30, 2022 9:30 AM UTC

Figure 1: Russia Gross External Debt — Foreign Currency Bonds, $m
Source: Bloomberg, Continuum Economics
Default was a foregone conclusion since the U.S. Treasury failed to renew the waiver for Russian debt payments on May 25, but it is now official: Russia's failure to pay interest on a pair of Eur

Central Bank Response to $160 WTI Cuts Growth

June 29, 2022 9:23 AM UTC

Figure 1: Higher Oil Prices Mean Slower GDP Growth in US, EZ and China Relative to Baseline
Source: Continuum Economics, NiGEM
Baseline
Our baseline view for WTI oil prices for end-2022 is $130 and $110 for end-2023. Our baseline view includes disruption from the ongoing war in Ukraine, which we expect

MENA: Opportunities and Challenges in the Energy Transition

June 22, 2022 10:48 AM UTC

Figure 1: Oil Production and Proven Reserves (% of global total, 2020 data)
Source: BP
Navigating the Energy Transition
MENA countries have been navigating energy market challenges over the past two years, with oil price stabilization in 2020 helped by OPEC+ production cutbacks during the COVID cris

Commodities Outlook: Ukraine War Aftereffects, then Economic Expansion

June 17, 2022 10:57 AM UTC

Figure 1: OECD Commercial Oil Inventories (millions of barrels)
Source: U.S. EIA
Oil: Prices to Remain Elevated
The oil market remains tight, with OECD inventories low, supply growth restrained and demand recovery continuing. Oil demand recovery will slow into 2023, both as pent-up demand from post-C

June 3, 2022 8:34 AM UTC

Figure 1: Brent, European Gas (TTF) and Coal (Ara) (31/12/2019 = 100)
Source: Datastream
OPEC+ Help Not Enough with EU Ban
OPEC+ decision to increase production quota in July and August by 648k barrels p/d will likely be followed later in the year by Saudi Arabia voluntary production increase by