Citigroup Hails Outlook for Commodities Over Rest of YearBy and
‘Crude should end the year on a high,’ bank predicts in report
Commodities poised for ‘sterling performance’ to end-December
Raw materials are set to round out 2017 with a bang, according to Citigroup Inc., which flagged prospects for further gains in oil and metals.
“Commodities have hit their stride since the start of the third quarter and are set for a sterling performance for the rest of 2017, particularly given stronger incentives for investment inflows,” the bank said in a report on Wednesday.
Raw materials are headed for a gain in the quarter that ends next week, powered by gains in metals including aluminum. In the current quarter, China gave a strong push to metals and bulks on better-balanced growth, a stronger yuan, and environmental and safety policies, the bank said.
“Overall, we expect strong performance to continue through year-end, with the oil complex perhaps joining, if not replacing, the strong performance of the China-related commodities and the precious metals,” Citigroup said. “After a stormy summer, crude should end the year on a high.”
The bank has been consistently bullish about commodities. In July 2016, it said it was positive as global growth chugs along and investors plow more cash into funds. Last month, the bank said markets from metals to iron are tightening globally as China presses on with supply-side reforms.
For more on Citi’s forecasts see:
- Citi Sees Signs of Short-Term Price Recovery for Silver in 4Q
- Citi Lowers 3Q17 U.S. Natural Gas Price Forecast to $2.9/mmBtu
- Iron Ore Seen Sinking to $53 in ‘18 on China Slowdown, Citi Says
- Comparison with Goldman Sachs forecasts
Citigroup remains neutral-to-bullish on oil near term as inventories are likely to fall and the physical market may tighten. Brent is seen $58 a barrel in the fourth quarter, and $54 in 2018, with West Texas Intermediate forecast at $50 next year. On Wednesday, Brent traded at $55.94 and WTI was just above $50. The bank lowered its third-quarter natural gas forecast to $2.9 per million British thermal units.
“Supply-demand fundamentals continue to trend in-line with our constructive expectations and oil inventories have fallen at a rate of about 1 million barrels a day over the course of the summer,” the bank said. “This is expected to continue through 2017,” it said.
— With assistance by Eddie Van Der Walt