Oil is unlikely to participate in the next commodity supercycle – CE
|Slower demand growth and an abundance of supply will limit gains in oil prices over the long-term, which strategists at Capital Economics think will ultimately prevent oil from featuring in the next commodity supercycle.
Key quotes
“While we don’t think that we are on the cusp of another commodity supercycle, we doubt that oil prices would outperform other commodities in the next one – whenever it may be – for two key reasons.
“The transition to green energy will lead to a structural decline in oil consumption. We expect that global oil demand will peak in around 2030 and fall continuously thereafter.”
“A greater uptake of EVs would boost metals demand and prices meaning that – if anything – metals will probably be the key beneficiary of any future commodity supercycle.”
“We think that an abundance of oil supply will place further downward pressure on oil prices. The greater flexibility of US shale production and the desire by many oil producers, particularly in OPEC+, to avoid their reserves being left untapped means that the world will soon be awash with oil. By contrast, metals mine supply involves much longer lead times, suffers from dwindling ore quality and production can’t be ramped up as quickly.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.