Geopolitics will be a factor in OPEC’s output policy

Softer April activity and spending data out of China and negative sentiment surrounding the impasse in US-China trade talks weighed on the prices of many metals this week. We had always suspected that the stronger Chinese data in March had been driven by seasonal factors and maintain that slower economic growth in China will be one of the key factors pushing the prices of most industrial metals lower this year. Turning to next week, there may be some greater clarity on the direction of OPEC+ oil output policy after the Joint Ministerial Monitoring Committee (JMMC) meeting in Jeddah this weekend. The JMMC typically considers the oil market balance and quota compliance, but it will be hard for them to ignore the recent attacks on Saudi Arabia’s oil infrastructure. We actually think that the escalation in geopolitical risk has made it less likely that the JMMC will announce definitive recommendations on production ahead of next month’s official bi-annual OPEC meeting.