FXStreet (Guatemala) - Analysts at Deutsche Bank broke down the commodity sector.
Key Quotes:
"Energy: The oil market stands in a mode of tension between gradually lower expectations of US oil supply, uncertainty over the timing of new Iranian volumes, and now lower forecasts of 2016 oil demand growth amidst somewhat weaker GDP estimates. What remains clear is that although the process of rebalancing is well underway, it will be a lengthy one with the potential for relapses to the downside. On the bright side, a fresh cycle low in the US oil-directed rig count increases our confidence around the prospects for a significant decline in US oil production in 2016.
Precious Metals: Gold prices have reached the highest level since June as real interest rates have slid backwards by roughly 20 basis points since the end of September. Recent US economic data now points to a weaker outlook than Fed policymakers would have incorporated into their September proceedings, thus contributing to a rosier near term picture for the precious metals complex as long as uncertainty remains high on the timing of US policy normalization.
Industrial Metals: Our bull case on zinc had been severely dented over the past three months. A strong USD combined with Chinese demand fears has seen a build of shorts on the LME, and prices collapse by USD800/t since the beginning of May. Glencore’s bold step of closing a similar amount of capacity is likely to squeeze out short positions, and lead to a deficit market of c.500kt in 2016E. This would be the fifth year in a row of zinc deficits, and we forecast the zinc price to recover and average USD2,275/t in 2016E. "
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