OPEC: Will they, won’t they?

Most commodity prices fell sharply this week on concerns that the rise in trade tensions between the US and China could spiral into a full-blown trade war. There were particularly sharp drops in the prices of the US agricultural commodities targeted by China’s tariffs. Unusually, given the heightened uncertainty, the price of gold also fell but this may have had more to do with the appreciation of the US dollar. On Friday, OPEC and its allies convened in Vienna. The outcome is highly uncertain, as member states are divided on whether to raise oil production in response to international pressure and higher prices. Our price forecast assumes that the group will raise output, but it may need revising if there is a different outcome to the meeting. More generally, the ongoing trade dispute between the US and China could continue to weigh on investor sentiment next week as there is little in the way of market-moving data.