Major supply interruptions and resulting historically higher prices have been created by the situation in Ukraine. To a greater extent than in 2021, commodity prices are anticipated to rise in 2022 and persist at elevated levels over the medium term. Brent crude oil is expected to reach an average price of $100/bbl in 2022, up 42% from 2021 and the highest level since 2013.
The present degree of market volatility and uncertainty is quite dangerous. Inflation continues rising after years of historically low levels; war has returned to Europe; supply networks have not entirely recovered from the COVID-19 epidemic, and monetary policy is a regular topic on the nightly news.
The highest gains will be seen in goods where Russia or Ukraine are important exporters, such as agricultural products. The price of wheat in particular is expected to rise by almost 40% this year, setting a new nominal high. Although average costs are predicted to level out by 2022, that’s still a significant increase over what was anticipated only a few years ago. In this article, we’ll review some of the most popular commodities in the market, how they perform and how their future performance is most likely to change.
Gold
Contrasting impacts of consistently strong inflation and central banks boosting interest rates have shaped the gold market story. Gold touched its lowest level in almost a year and a half on July 11 as the US dollar reached a 20-year high. The price, as this forex trading site shows, has increased to over $1,711 per ounce since early March, although it’s still much below the $2,000 mark. Goldman Sachs, a major US financial firm, expects the price of gold to increase dramatically this year. At the end of March, they forecasted that the price of gold would rise to $2,300 per troy ounce within three months, and to $2,500 between six and twelve months.
Even if the commodity has gained steam in the previous month thanks to a lower US dollar, increasing US Treasury rates remain the primary reason why most experts do not have a favorable longer-term outlook for gold. It was predicted by London Bullion Market Association experts that the average price of gold, which is one of the most popular trading futures, this year would be similar to the average price of gold in 2018, hence the outlook for the gold market was neutral. An average price of $1,802 per troy ounce would represent a modest rise of 0.2% over the average price in 2021. The predictions, however, were made in early January, far before the beginning of the war in Ukraine.
Oil
Concerns about the global economy, interest rate rises by central banks, and China’s new measures to combat the spread of COVID-19 all contributed to further declines in oil prices on Wednesday.
Brent oil futures for October expire on Wednesday, and they were down $3.56 to $95.75 a barrel on Wednesday afternoon, adding to the $5.78 drop they experienced on Tuesday. The November contract, which is often more liquid, fell $2.70, or 2.76%, to $95.14 per barrel.
Oil price predictions have become more difficult to make due to the presence of competing supply and demand forces. Growing economic slowdown concerns may have a negative impact on oil use. Furthermore, anxiety regarding supplies from the world’s second-biggest oil producer, behind Saudi Arabia, has intensified due to prolonged sanctions against Russian oil shipments.
By 2025, the EIA estimates that the nominal price of Brent crude oil will have increased to $66/b. Brent crude oil prices are projected to rise to $89 per barrel by 2030 as a result of rising global demand. The predicted price in 2040 is $132 per barrel. By then, the cheapest places to get oil will be dry, hence the price of oil will rise. Estimates suggest that by 2050, the price of a barrel of oil could reach $185.
By 2025, the price of a barrel of WTI is projected to reach $64, rising to $86 in 2030, $128 in 2040, and $178 in 2050.
Gas
Gasoline prices are coming down from their all-time high in June, which is good news for consumers.
In June, RBOB futures on the Chicago Mercantile Exchange (CME) hit an all-time high of $4.326 a gallon, but by August, they had dropped below $3 per gallon. By 2034, gas is expected to overtake coal as the nation’s principal energy source. As a result, its peak consumption is expected to occur in 2035, far after that of other fossil fuels. However, demand will rise steadily over the next five years since it is compatible with the expanding use of renewable energy sources.
Gas in storage compared to the five-year average is another consideration that fits this gas projection and is looked at by many market experts.
