Commodity prices are balanced: multiple macro-/supply-shocks vs. subdued demand growth. But the restart of US shale oil capability is probably a bearish tipping point…
New bear point: Commodity markets have featured price ceilings in recent months, despite the upside risk created by a post-US election reflation kick + China’s credit surge + several supply shocks. These three bull-factors have been offset by stable, subdued demand growth ) – undermining equity performances too. Now, there may be a new bear point in play for metal/rock prices: reactivation of US shale capability, following the Jan-17 OPEC-induced price lift. This shift seems sufficient to cap oil prices for now.
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David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific's leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
