Latest from ANZ on commodities, with a focus on oil – this is in brief:
- escalating trade tensions continue to weigh on the commodity sector
- we view the oil market as the best sector in which to wait out the volatility
- Crude oil trade has so far been immune to the retaliatory tariff action, while its demand characteristics suggest it should withstand any impact.
- Moreover, its supply-side issues amid a backdrop of falling inventories should override any concern over weaker economic growth.
- Aside from rising geopolitical risks, underlying supply issues should keep the crude oil market tight.
- Recent data suggest that outside the US, growth in supply is difficult to find.
- OPEC output continues to fall, beyond the targets of the production cut agreement. There have also been delays in new projects in Angola and Brazil.
- We see downside risks to several producers. Libya … Iran, Venezuela represents the biggest risk
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