Commodities and
currencies may continue to be in the spotlight for investors this week,
as prospects for a Federal Reserve interest rate rise and the Chinese
stock market slump work their way around global markets.
With
most commodities priced in U.S. dollars, the strength of the greenback,
and the slowdown in China is leading a rout in commodity markets.
U.S. WTI benchmark crude oil prices fell by 20 percent in July, the biggest monthly fall since October 2008, while Brent crude oil prices, the international benchmark, fell by 18 percent, the biggest monthly fall since December last year.
Production from Organization of the Petroleum Exporting Countries (OPEC) is up more than 1.5 million barrels per day since the start of the year and the recently announced anti-nuclear deal with Iran will mean more oil on world markets.
And despite the steep decline in the U.S. oil rig count, domestic oil production has risen about 500,000 barrels per day this year to 9.7 million barrels a day, the highest since 1971, according to the U.S. Energy Department.
"If Saudi Arabia and Iraq keep running full tilt and Libya and Iran get their oil production back on track, crude prices could languish below $60 for the next three years," said Morgan Stanley analyst, Martijn Rats in a research note. "On current trajectory, this downturn could become worse than 1986,” he said.
Copper prices fell 10 percent in July, the worst month since January and are now at their lowest levels since June 2009.
Overall the Reuters commodity index .TRJCRB fell 10.8 percent in July, its biggest monthly fall since September 2011.
Reflecting the economic slowdown in China and sluggish growth in Europe and the Americas, international trade is also slowing.
World trade has dropped over 2.0 percent in the last six months, the biggest decline since 2009, meaning world trade will likely have experienced its first back-to-back quarterly contraction since 2009, according to the latest Merchandise World Trade Monitor of import and exports published by the CPB Netherlands Bureau for Economic Policy Analysis.
U.S. WTI benchmark crude oil prices fell by 20 percent in July, the biggest monthly fall since October 2008, while Brent crude oil prices, the international benchmark, fell by 18 percent, the biggest monthly fall since December last year.
Production from Organization of the Petroleum Exporting Countries (OPEC) is up more than 1.5 million barrels per day since the start of the year and the recently announced anti-nuclear deal with Iran will mean more oil on world markets.
And despite the steep decline in the U.S. oil rig count, domestic oil production has risen about 500,000 barrels per day this year to 9.7 million barrels a day, the highest since 1971, according to the U.S. Energy Department.
"If Saudi Arabia and Iraq keep running full tilt and Libya and Iran get their oil production back on track, crude prices could languish below $60 for the next three years," said Morgan Stanley analyst, Martijn Rats in a research note. "On current trajectory, this downturn could become worse than 1986,” he said.
Copper prices fell 10 percent in July, the worst month since January and are now at their lowest levels since June 2009.
Overall the Reuters commodity index .TRJCRB fell 10.8 percent in July, its biggest monthly fall since September 2011.
Reflecting the economic slowdown in China and sluggish growth in Europe and the Americas, international trade is also slowing.
World trade has dropped over 2.0 percent in the last six months, the biggest decline since 2009, meaning world trade will likely have experienced its first back-to-back quarterly contraction since 2009, according to the latest Merchandise World Trade Monitor of import and exports published by the CPB Netherlands Bureau for Economic Policy Analysis.
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