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All Commodities Publications

Commodity strategy — Rising oil price forecast

We have been expecting lower oil prices for some time. However, we now see a steady line of price-supporting factors playing out. We therefore increase our oil price forecast from USD 55 to USD 70 at the end of 2018. We continue to believe USD 50-55 is a reasonable range for supply and demand to grow in tandem in the longer term.

Martin Jansson, Strategist | nija03@handelsbanken.se

Strategy comment — Iran deadline: US likely to quit deal, hold off on sanctions

Saturday May 12 is one of a series of recurring deadlines by which US President Donald Trump must decide whether to renew his country's 2015 deal with Iran. The deal released Iran from sanctions in return for limitations on its nuclear programme. We identify three scenarios ahead of Saturday and we believe the most likely is that Trump will leave the current agreement, but hold off on imposing new sanctions against Iran. This is in line with what we see as a key part of Trump's foreign policy tactics regarding Iran: creating uncertainty. We believe Trump is seeking to create a toxic atmosphere regarding Iran, which we believe he sees as much more effective than the sanctions themselves. If the decision goes this way, we believe it would be good for Trump, bad for the EU, and the price of oil would rise due to an increase in uncertainty.

Martin Jansson, Strategist | nija03@handelsbanken.se

Saudi Aramco IPO — Can the crown prince deliver?

• McKinsey report laid the foundations
• Aramco is too big to value
• Too many "ifs" and "buts"

Martin Jansson, Strategist | nija03@handelsbanken.se

Commodity Bulletin — Politics take over commodities market

Trump, Xi and MBS
Following a two-year rise in prices, fully in line with the global economic expansion, with the strongest synchronised growth in years, politics now appear to be taking over. President Trump is introducing tariffs on steel and aluminium in the world's strongest economy. Xi Jinping will likely be president for the rest of his life, leaving him free to pursue his priorities in what is the world's largest producer and consumer of commodities. Meanwhile, Crown Prince Mohammed Bin Salman has outmanoeuvred his opponents in Riyadh and is ruling OPEC with an iron fist. If the economic climate drove commodities to this point, politics will have a greater influence moving forward.

China's decline deferred
Although the expectations of China's performance in 2018 have been low, the data has proved a pleasant surprise so far. There was uncertainty regarding the growth target since Xi has focused less on this lately. However, the growth target of "around 6.5%," remains in place, compared with the target of "around 6.5% or higher if possible" that was stated in 2017. The significance of the growth target has been played down, but the fact that it remains means that China will continue to steer its economy toward this target moving forward, probably until 2020, we believe.

OPEC gets a free ride due to Venezuela's collapse
Adherence to the agreement on production curbs by OPEC rose to 147% in February, the highest since the agreement was introduced in January 2017. The crisis in Venezuela is accelerating and reducing oil production so much that the oil market may approach a market balance deficit during the year. Venezuela is the reason that OPEC's adherence is nearly 50% higher than agreed. Even though we still think the oil price is on its way down, we raise our forecast for year-end 2018 from USD 50 to USD 55.

Martin Jansson, Strategist | nija03@handelsbanken.se

Råvaruplanket — Politiken tar över råvarumarknaden

Trump, Xi och MBS
Efter två års prisuppgångar på råvaror, helt i linje med den globala konjunkturens frammarsch med den starkaste, synkroniserade tillväxten på många år, ser nu politiken ut att ta över. Trump inför tullar på stål och aluminium i världens största ekonomi. Xi Jinping har utropats till president för resten av sitt liv i världens största producent och konsument av råvaror. Kronprins Mohammed Bin Salman har utmanövrerat sina motståndare i Riyad och styr OPEC med järnhand. Om konjunkturen drev råvarorna hit har politiken större inflytande framöver.

Kinas nedgång rullas fram
Förväntningarna på Kina för 2018 har varit lågt ställda, hittills har dock data överraskat positivt. Det fanns en osäkerhet kring tillväxtmålet då Xi lagt mindre fokus på det under senare tid. Tillväxtmålet ligger dock kvar på "omkring 6,5" att jämföra med "omkring 6,5% eller högre om möjligt" som gällde 2017. Tillväxtmålets betydelse har ändå spelats ner men det faktum att det finns kvar gör att Kina kommer fortsätta styra ekonomin mot målet framöver, antagligen fram till 2020.

OPEC åker gratis på Venezuelas kollaps
OPEC:s genomförandegrad med avtalet om att sänka produktionen steg till 147% i februari, högsta sedan avtalet inleddes januari 2017. Krisen i Venezuela accelererar och minskar oljeproduktionen så pass mycket att oljemarknaden kan gå mot underskott i marknadsbalansen under året. Venezuela ligger bakom att OPECs genomförandegrad är nästan 50% högre än avtalat. Vi tror fortfarande att oljepriset är på väg ner men höjer vår tro vid slutet av 2018 från USD 50 till USD 55.

Martin Jansson, Strategist | nija03@handelsbanken.se