Commodities Still Rising

Speaking of oil, what price action can we expect from it now? Over the past few weeks it has been suggested that the oil gluttons in the US have pared back on driving which has resulted in a major drop in gasoline demand.

After reaching nearly USD$150 a barrel the price of oil has since dropped back to below USD$120, but it is still a high price. And it has been a similar pattern for many commodity prices across the board, in that although they have fallen back from peak levels they are still significantly above levels since even just one year ago.

The chart above shows five commodity indices that include a cross section of commodities such as energy, agriculture and metals.

The impact of China is still the overwhelming influence on commodity prices, and now that the Olympics have finished, the next few months should indicate whether the Chinese economy will pick up from where it left off prior to the games, once they reopen factories and industry again, or whether the Olympic Games was the peak.

It’s just a hunch, but we get the feeling that the former will be the case.

let’s takes a look at one of those commodities below, natural gas.