Tentative signs we are past the peak in energy prices

The meteoric rise in energy commodity prices over the last few months lost momentum this week. Natural gas and coal prices were down particularly sharply in Europe after President Putin reiterated comments that there is scope for a rise in supply from Russia if Nord Stream 2 is approved. That said, they were also down in Asia following an announcement by China’s state planner that it would take steps to stem the surge in prices. Of course, the situation remains highly fluid and, even in a best case scenario, energy commodity prices are still likely to remain high for several months yet – not least as stocks will need to be rebuilt from their current lows. However, the big picture is that the risk of a renewed surge in energy prices seems to have fallen. There is little in the way of major data releases next week, though we will continue to closely monitor developments in the energy market. Otherwise, we will publish our Commodities Overview Outlook towards the end of the week. The main message is that we now expect most commodity prices to remain well supported for the rest of this year, but we are sticking to our view that they will come off the boil in 2022 as issues with supply fade and the slowdown in China’s economy intensifies.