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Commodity Markets Outlook

Burning bright or burned out? The outlook for coal and natural gas markets

Peter Nagle's picture

This blog is the third in a series of ten blogs on commodity market developments, elaborating on themes discussed in the latest edition of the World Bank’s Commodity Markets Outlook. Earlier blogs can be found here.
 
Recent developments and outlook: coal

Coal prices rose 12 percent in the third quarter—the fifth straight quarterly increase—and are up 23 percent relative to the same quarter of 2017. Weather patterns in Asia and Europe have been the main drivers of the rise in prices. Low winter temperatures at the start of the year raised demand for fuel for heating, while unusually hot summer temperatures boosted electricity demand for air conditioning. In addition, low hydro availability and supply constraints in the two largest markets--China and India—increased coal imports.

Prices are projected to decline from current elevated levels as China is expected to reduce coal imports by stimulating domestic production, as well as by lowering the share of coal in energy consumption. Upside risks include continued strong growth in electricity demand in other emerging markets that will be met to some extent by coal. Production shortfalls in China and India could also raise import demand and support prices.
 

Pumped up? Prospects for oil markets in 2019

Peter Nagle's picture

This blog is the second in a series of ten blogs on commodity market developments, elaborating on themes discussed in the latest edition of the World Bank’s Commodity Markets Outlook. Earlier blogs are here.

Recent Developments and Forecasts

Oil prices have been volatile in 2018, with the price of Brent, the international barometer, ranging from $63/bbl to $86/bbl. Prices have been buffeted by an array of geopolitical and macroeconomic factors, notably supply disruptions in Venezuela, and the reinstatement of U.S. sanctions against Iran. These factors supported prices this year, particularly in September and October; however, prices fell sharply in early November as fears of a supply shortfall receded after the United States announced temporary waivers to its sanctions on Iran for eight countries, as well as stronger-than-expected U.S. oil production.

Commodity Markets Outlook: Modest Oil Price Rise, Trade Uncertainty

John Baffes's picture
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Commodity prices have moved in different directions in recent months – energy prices rose while agriculture and metal prices fell – and are expected to rise or stabilize in 2019, according to the October Commodity Markets Outlook. The following five charts explain:  

Figure 1: Energy and agriculture prices are seen rising in 2019, but forecasts are revised down for all commodities except energy and fertilizers.

Why commodity prices are rising, in nine charts

John Baffes's picture
Commodity prices strengthened in early 2018, supported by supply and demand factors, including accelerated global growth, which has lifted demand for most industrial commodities, and supply constraints affecting others.

Chart 1: Commodity prices are forecast to rise across the board

The energy price index is anticipated to rise 20 percent in 2018, largely on strengthening of oil prices. The increase is a 16-percentage point upward revision from October 2017. Metal prices are projected to increase 9 percent in 2018 due to a further pickup in demand. Agricultural prices are forecast to gain more than 2 percent.
 
2018 commodity price rise forecasts (percent change from 2017 to 2018)
Source: World Bank

Where commodity prices are going, explained in nine charts

John Baffes's picture
The most recent World Bank Commodity Markets Outlook forecasts commodities prices to level off next year after big gains for industrial commodities—energy and metals—in 2017. Commodity prices appear to be stabilizing after a boom that peaked in 2011, albeit at a higher average level than pre-boom.
 
Chart 1

Energy prices rose almost 3 percent in April: Pink Sheet

John Baffes's picture

Energy commodity prices rose 2.7 percent in April as the crude oil average rose 2.5 percent, according to the World Bank’s Pink Sheet.

Non-energy prices declined 2.4 percent as agriculture fell 1.4 percent, food and beverages prices dipped by 2.1 percent and 1 percent, respectively, and raw materials rose 0.3 percent. Fertilizer prices declined 6 percent.

Metals and minerals prices slid 4.3 percent, led by an almost 20 percent tumble in iron ore. Precious metals eased 2.7 percent.

The Pink Sheet is a monthly report that monitors commodity price movements.

Record-setting El Niño may disrupt locally but won’t cause spike in global ag commodities prices

John Baffes's picture
El Niño weather patterns are known to disrupt commodity production, and by most accounts the current episode will be the strongest on record. Although this El Nino could cause considerable damage at the local level, it is not expected to cause major disruptions to global commodity markets.