Each Month Commodity Research Group puts together deep in depth analysis on the macro and commodity world. Have a look at the January and 2019 outlook.
Highlights for December/January: Commodities held out much promise at the beginning of 2018, as major economies
were all growing in a synchronized fashion. Encouraged by this state of affairs (this was before the tariff wars) analysts figured
that the Reuters-Jefferies commodities index would have a solid showing in 2018, building
on the strong rally that set in during the second half of 2017. For a while, commodities did
respond, pushing higher through May, but by the second half of the year – as we see in our
chart below – the asset class fell apart to end the year sharply lower.
The selloff in the index during December was particularly brutal (see the boxed-in area in
red) and although we have recovered some ground in January, the index has yet to make
up all the ground it lost. Much of the move in the index during the past six weeks was attributable
to the incredible swings in oil and oil products. Early in 2018, oil was tipped by many
analysts (although not by us) to top $100 a barrel, but instead it plunged by almost 40%
from its 2018 peak of $86.74 to end the year at just under $54/barrel. In December alone,
crude prices sank by some 30% — its worst monthly decline since the financial crisis. It then
stitched together a series of gains towards the end of December.