The war between Russia and Ukraine is not the only issue for traders to consider though. Covid-19 disruption in China, lower global growth, rising interest rates, and the strength of the US dollar are some other factors that could have an impact on the asset class in the near term.
Irrespective of what happens on the economic or geo-political front, there are likely to be plenty of opportunities for traders and investors in the commodities space in the months ahead. With that in mind, here’s a look at five commodities to watch in the second quarter of 2022.
Oil prices have pulled back from their March highs recently. Yet prices remain much higher than they were 12 months ago.
Looking ahead, many experts expect oil prices to stay high due to the supply deficit caused by Western sanctions against Russia. The US Energy Information Administration (EIA), for example, expects WTI oil to average $112 per barrel for the second quarter of 2022.
Meanwhile, analysts at Morgan Stanley recently revised their Brent oil price forecast for the second half of 2022 up to $130 per barrel due to supply issues. They now anticipate oil production from Russia to drop by two million barrels this year, up from a previous forecast of one million barrels.
Recently, US President Joe Biden announced a release of one million barrels of crude oil per day for six months from the US Strategic Petroleum Reserve (SPR). This is the largest release from the SPR ever. However, analysts at Barclays believe this release will not have a lasting impact on oil prices.
One factor that could have a negative impact on oil prices though is new Covid-19 lockdowns in China. The International Energy Agency (IEA) believes these lockdowns will reduce global demand, which will offset the impact of lower supply from Russia. Those bullish on oil may wish to consider oil stocks such as Exxon-Mobil, Shell, and Chevron.