More price falls to come, led by oil

Other analysts are reportedly “shell-shocked” by the sharp declines in the prices of oil and other commodities in May, but we had already been braced for the fall-out from an escalation of the crisis in the euro-zone, slower growth in China and only a sluggish recovery in the US. What’s more, the underlying forces are sufficiently powerful that any additional policy stimulus (hopes of which are providing some support this week) can only limit the downside rather than prevent further falls. Correspondingly, our commodity forecasts need only small changes to reflect the recent turmoil.