Despite the current uncertainty in the world virtually all commodities are currently trading at the low end of expectations. The relatively strong pound does not help. Following the Scottish independence vote, the pound is at a two year high against the Euro and at US$1.613, up from US$1.577 last October.
The fossil oil price is now trading at $95 per barrel, down over 15% against this time last year. The USA is now the biggest producer of fossil derived oil producing over 11 million barrels a day and exceeding the output of both Russia and Saud Arabia. This compares with Scotland’s output of 1.4 million bpd.
With the huge growth in shale derived fuels and sustainable energy, unless the unforeseen occurs, we can now expect a weak price for oil over the foreseeable future.
Add to this the all-time highs for the harvest of most types of agricultural crops around the world we have seen a drop in prices which has had a knock on effect on recovered fuels. For instance the value of used cooking oil has dropped over 30% to below £400 per tonne in recent months.
Both ferrous and non-ferrous metals have also softened around 40% since the beginning of the year.
With much of the Western world still in the doldrums and the heat coming out of Far Eastern markets it is hard to be bullish. The good news is inflation and therefore interest rates are going to remain restrained for some time to come.