Credit Suisse lowered its 2012 price forecasts for commodities across the board, including oil, precious metals and base metals, saying the balance of near-term risks to the industrial commodity complex is to the downside.
“While we expect a modest recovery in the second half of the year, the pace of growth is likely to remain relatively subdued,” Credit Suisse analysts said.
Credit Suisse cut its 2012 Brent crude price forecast to $104 per barrel from $125 per barrel earlier, while it reduced the WTI price outlook to $91 per barrel from $112 per barrel.
The recent softening in oil prices has been driven by a change in fundamentals as global demand remained stagnant so far this year and supply rebounded substantially with Saudi Arabia doing the heavy lifting, Credit Suisse said.
The bank said it expects oil prices to gradually move higher through 2013. Credit Suisse cut 2012 gold price forecast to $1,680/oz from its prior forecast of $1,765/oz. It lowered 2012 silver price forecast to $30.50/oz from $33.50/oz.
“Growing concerns about debt deflation in an environment in which policymakers are seen to have run out of effective monetary policy ammunition” and a marked improvement in global growth prospects are the two scenarios in which gold would perform poorly, the bank said
It also cut its 2012 copper price forecast to $7,747/MT from $8,980/MT and aluminum price forecast to $2,024/MT from $2,395/MT earlier. “We now think copper will experience a much milder price cycle ahead than we had envisaged under more positive global economic expectations,” it added.
Credit Suisse said ample supply will tend to keep aluminum and nickel prices trapped within generally narrow bounds.
“Moving into 2013, our economists expect global growth to rebound to around 4 percent. In turn, we expect commodity prices to gradually move higher over the course of next year.”