Commodities

Commodity markets in spotlight as geopolitical conflict rolls on

_{Posted on Jun 20, 2022}

High oil prices are outweighing demand growth in the US. Despite the historically busy summer period, demand is staying at multi-year lows, comparable to periods when WTI prices were high. The need for European markets to find substitutes for Russian oil is exerting a strong pull on US crude and product exports.

Oil: Citi expects oil prices to continue being volatile, but with a clear downward bias through the end of the year. Given the uncertainties of conflict, there could be further supply disruptions from Russia this year. However, given the strong headwinds to growth resulting from both higher prices of commodities and central bank actions, Citi projects a trendline downward in prices through 2023. While Brent prices are swinging between $114-124 so far in June, and could remain spiky through the summer, Citi’s base case is that prices could ease to the 80s by 4Q’22, and could be in the $70s in 2023, trending down to the USD50-60 per barrel range thereafter.

Citi Oil Price Forecasts

Gold: Gold markets are not likely to inform financial markets of imminent recession. Whereas rates, inflation, and FX are co-determined with some commodity prices (e.g. crude oil), gold prices are reactive. Yet the negative performance of gold in recent months does not contrast with mean or median annualized returns preceding significant US growth contractions over the past four decades. Citi maintains a 3Q’22 gold price forecast of ~$1,845/oz, bottoming to an average of ~$1,750/oz in 1Q’23, and then rallying to $2,000/oz into 2024. The US falling into recession (sooner than later) might see gold prices rally a bit sooner.

Bulks and metals: In the scenario that global growth continues to weaken over the next 3-6 months, zinc and nickel appear to have the furthest to fall in percentage terms, while aluminum the least. Citi expects Chinese smelters to be responsive, as Chinese steel mills have been, to ongoing weakness in the market in China, and in line with recent history.

_{By Citi Wealth Insights | May 4, 2022}

Commodity markets in spotlight as geopolitical conflict rolls on

The geopolitical situation remains fluid and an escalation in the Russia-Ukraine conflict may buttress risk-on investor flows. Even as Russian production slides, a global GDP slowdown is hitting oil demand, relief for sanctions on Iran could be on the way, and non-OPEC+ supply is growing fast while Strategic Petroleum Reserve releases could now total 300-m bbls this year.

Wealth Insights Commodities

_{By Citi Wealth Insights | Apr 5, 2022}

How long will geopolitics upend commodity markets

Given today’s unique conditions, the GIC has further enhanced its asset allocation with the addition of tactical exposures to natural resources, oil services firms and gold that aims to add diversification and serve as a possible hedge against tail risks.

Wealth Insights Asset Allocation Commodities

_{By Citi Wealth Insights | Mar 7, 2022}

Commodities: Geopolitical Uncertainty Support Short-term Upswing

Western producers will have to step up and fill Russia’s energy export gap as well as agricultural export losses from Ukraine. The future prices of oil and other commodities has shifted higher and might stay in higher range for longer.

Wealth Insights Asset Allocation Commodities

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This communication does not constitute the distribution of any information in any jurisdiction in which it is unlawful to distribute such information to any person in such jurisdiction.

CHKL does not provide discretionary portfolio management services.

Singapore: This communication is distributed in Singapore by Citibank Singapore Limited (“CSL”) to selected Citigold/Citigold Private Clients. CSL provides no independent research or analysis of the substance or in preparation of this communication. Please contact your Citigold/Citigold Private Client Relationship Manager in CSL if you have any queries on or any matters arising from or in connection with this communication. Investment products are not insured under
the provisions of the Deposit Insurance and Policy Owners’ Protection Schemes Act of Singapore and are not eligible for deposit insurance coverage under the Deposit Insurance Scheme.

This communication is for general information only and should not be relied upon as financial advice. The information herein has no regard to the specific objectives, financial situation and particular needs of any specific person and is not intended to be an exhaustive discussion of the strategies or concepts mentioned herein or tax or legal advice. Any person interested in the strategies or concepts mentioned herein should consult their independent tax, legal, financial or other advisors,
as appropriate. This communication does not constitute the distribution of any information or the making of any offer or solicitation by anyone in any jurisdiction in which such distribution or offer is not authorized or to any person to whom
it is unlawful to distribute such information or make any offer or solicitation.

Before making any investment, each investor must obtain the investment offering materials, which include a description of the risks, fees and expenses and the performance history, if any, which may be considered in connection with making
an investment decision. Interested investors should seek the advice of their financial adviser about the issues discussed herein as appropriate. Should investors choose not to seek such advice, they should carefully consider the risks associated
with the investment and make a determination based upon the investor’s own particular circumstances, that the investment is consistent with the investor’s investment objectives and assess whether the investment product is suitable for
themselves. Although information in this document has been obtained from sources believed to be reliable, CSL does not guarantee its accuracy or completeness and accept no liability for any direct or consequential losses arising from Its use.

CSL does not provide discretionary portfolio management services.

UAE: This document is distributed in UAE by Citibank, N.A. UAE. Citibank N.A. UAE is licensed by UAE Securities and Commodities Authority (“SCA”) to undertake the financial activity as Promoter under license number 602003.

Citibank N.A. UAE is registered with Central Bank of UAE under license numbers BSD/504/83 for Al Wasl Branch Dubai, 13/184/2019 for Mall of the Emirates Branch Dubai, BSD/2819/9 for Sharjah Branch, and BSD/692/83 for Abu Dhabi Branch.

This is not an official statement of Citigroup Inc. and may not reflect all of your investments with or made through Citibank. For an accurate record of your accounts and transactions, please consult your official statement. Before making any investment, each investor must obtain the investment offering materials, which include a description of the risks, fees and expenses and the performance history, if any, which may be considered in connection with making an investment decision. Each investor should carefully consider the risks associated with the investment and make a determination based upon the investor’s own particular circumstances, that the investment is consistent with the investor’s investment objectives.
At any time, Citigroup companies may compensate affiliates and their representatives for providing products and services to clients.

United Kingdom: This document is distributed in the U.K. by Citibank UK Limited and in Jersey by Citibank N.A., Jersey Branch.

Citibank UK Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Our firm’s Financial Services Register number is 805574. Citibank UK Limited
is a company limited by shares registered in England and Wales with registered address at Citigroup Centre, Canada Square, Canary Wharf, London E14 5LB, Companies House Registration No. 11283101.

Citibank N.A., Jersey Branch is regulated by the Jersey Financial Services Commission. Citi International Personal Bank is registered in Jersey as a business name of Citibank N.A. The address of Citibank N.A., Jersey Branch is P.O. Box 104, 38 Esplanade, St Helier, Jersey JE4 8QB. Citibank N.A. is incorporated with limited liability in the USA. Head office: 399 Park Avenue, New York, NY 10043, USA.

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