Scotiabank’s Commodity Price Index posted its first monthly loss in July since February.
The index was down 1% from June as metals strength (+4.6% month over month) was overwhelmed by weakness in the Oil & Gas (-4.7%) and Agriculture (-5.2%) segments.
Read: Best ways to analyze energy companies
Virtually all base and precious metals saw gains last month. Nickel prices gained 15% over June thanks to nickel ore supply concerns in the Philippines, while zinc prices gained 9% due to supply constraints. Copper rose 5%, “but the outlook remains lackluster given the absence of any sustained supply response and weaker global demand prospects,” says a Scotiabank report on the commodity index.
Oil and gas
WTI prices fell to an average of $45.07/bbl after temporarily breaching $50/bbl in June. Despite that, Scotiabank forecasts that crude will rise “sustainably” above $50/bbl by the end of 2016.
Read: Oil prices heading for another slide?
The report notes that oil producers may look at restricting supply.
“OPEC members and large non-OPEC producers like Russia have begun discussing another attempt to freeze production, to be decided at a September meeting in Algiers — call it Doha 2.0.” While Scotiabank does not foresee a “hard agreement,” it says “many producers are pumping far more today than they were in the month prior to the Doha meeting, meaning that there is little downside to these participants agreeing to hold output at current levels.” Supply reductions could cause prices to rise.
The Agriculture Index fell by 5.2% in July as wheat (-6%), barley (-8%), and canola (-10%) returned their recent gains.