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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD keeps the red near 0.6200 after Chinese inflation data
AUD/USD keeps losses near the 0.6200 mark following mixed Australian data and as expected China's inflation numbers. The RBA's dovish shift and China's economic woes add to the weight on the Aussie as risk sentiment remains tepid. Fedspeak eyed.
USD/JPY: Bears attack 158.00 on strong Japanese wage growth data
USD/JPY drifts lower to test 158.00 early Thursday after data showed that base salaries for Japanese workers increased at the fastest pace in 32 years. The data backs the case for the BoJ to raise interest rates, which, along with the cautious market mood, benefits the safe-haven Yen and drags the pair away from a multi-month top.
Gold price holds steady below a multi-week high set on Wednesday
Gold price is seen consolidating its gains registered over the past two days, to a four-week top touched on Wednesday. The Fed's hawkish signal, the recent surge in the US bond yields and a bullish USD act as a headwind for the yellow metal.
Has Bitcoin topped for the cycle? Here's what key metrics suggest
Bitcoin experienced a 2% decline on Wednesday as the cryptocurrency market grapples with recent losses. On-chain data has indicated a shift in the accumulation of the leading cryptocurrency, suggesting that holders are increasingly selling their assets.
Bitcoin edges below $96,000, wiping over leveraged traders
Bitcoin's price continues to edge lower, trading below the $96,000 level on Wednesday after declining more than 5% the previous day. The recent price decline has triggered a wave of liquidations across the crypto market, resulting in $694.11 million in total liquidations in the last 24 hours.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.