Goldman Sachs Expects 43% Growth for Commodities Next Year | Lack of Oil and Mineral Fields to Push Prices
Per Bloomberg
Goldman Sachs remains bullish on commodities despite noting that some bumps could happen during Q1 of 2023 due to Chinese economies and the weakening US. The bank believes that scarcity will push the prices of commodities by 43% next year.
Other experts and investors also believe that commodity prices will soar even more because of metals on top of the scarcity of raw materials like oil to natural gas. This expectation comes as energy prices drop as China's Zero Covid policy starts to ease down.
A Goldman Sachs analyst gave a statement regarding why they strongly believe in the commodities market.
“Without sufficient capital investment to create a backup supply, the commodity market will remain stuck in short supply for a long time, prices will be high,”
Citigroup Inc. analysts also gave their two cents on the situation.
"The situation may be changing. The risk of a global recession would be a threat to an asset class that has experienced a rebound over the past two years.”
Despite its positive expectations for commodities in 2023, the company decided to cut its forecasts for Brent oil prices in Q1 and Q2 of 2023 to $105 - $115 per barrel instead of $90 - $95 per barrel, per Reuters.
The bank also noted that due to Chine consuming less energy than it was previously expected to consume due to its Zero Covid policy, there was less risk when it came to rising oil prices this winter.
Other international situations that notably affected how commodities were performing include Russia's exports increasing, nearing their initial pre-war levels, and Kazakhstan and Nigeria easing their production issues.
The Wall Street bank expects Q4 of 2022 to end with a surplus of 1.6 million barrels per day (bpd) but expects global demand to reach 2 million bpd in 2023 as international travel starts to recover and China reopens from its strict policies.
Goldman Representative: "Despite the recent price declines, commodities will still likely finish the year as the best performing asset class in 2022,"
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