Wed, December 07, 2022

Three commodities expected to rise as the economy recovers

Commodity Trading

 A year following the WHO announced the coronavirus crisis as an epidemic, all the world’s biggest economies are rebound trajectory and slated to record notable growth in the current year after significant slumps in 2020.

Oil

Following a historic slump, oil has also been on a break, up 110% in a year. In an apparent turnaround from last year, the energy sector has developed as one of the best-performing. Brent crude has been coquetting with $70 per barrel, a level it last reached nearly two years ago.

The oil rally this year has been driven by strengthening production discipline, including OPEC+ newly extending most output cuts to April and Saudi Arabia allowing to voluntarily increase its output amount of 1 million barrels per day output cuts as well as the continuous coronavirus vaccine rollout that gives confidence that a full reopening might not be far off.

You can anticipate seeing oil demand considerably in the following months as more people start to travel, particularly with the EU now launching a “Digital Green Certificate” that will promote secure and unrestricted movement within the bloc for people who have been vaccinated.

Copper

Furthermore, Danielle Shay has picked copper as the other commodity that can operate well in a reopening economy and act as a good fence versus inflation.

The price of copper has doubled in the prior year to above $9,000 a metric ton for the first time in nine years, inspired by tight supply and strong demand for the industrial metal.

Copper runs closer to an all-time high established in 2011 as investors proceed to trust that supply tightness will rise as the world recovers from the epidemic. Spencer Barnes, associate vice-president of mutual fund and ETF strategy at Raymond James Ltd, states that the thesis is mostly sound since copper is cyclical and operated by market expansion and should see a rush in demand given the extensive push to reopen the economy and the fiscal stimulus that could encourage consumption.

Lithium

Lithium bulls are experiencing their best moment in decades, lithium prices previously up 88% YTD thanks to strong demand for cobalt and nickel free EV batteries.

Bullish tech markets are unusual without odd dislocations. And right now, one of the most significant shortcomings can be observed in the massive momentum following EV stocks such as Tesla Inc. (NASDAQ: TSLA) and the lithium market, which has endured in bear territory for years now.

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