Brent crude prices have fallen 9% since the beginning of the month as OPEC+ members finally agreed to production increases for all members of the cartel. In doing so, the agreement will look to end the tightness in oil supply which has seen prices increase by 35% year to date, hitting the highest levels since October 2018 at $77 per barrel. Also adding to the weakness in current prices is higher inventory levels in the US whilst demand forecasts have softened in the near term from the resurgence of covid-19 cases across the world.
Chart 12: OPEC agreement sends oil lower
Activity in private equity (PE) markets continued at record pace as deal flow for Q2 2021 surpassed multi-year average levels for the third quarter in a row. Total PE deal flow for the first half of the year is estimated to have exceeded $450bn as record levels of dry powder continue to get allocated on the buy side whilst elevated market multiples and increased M&A activity continue to drive exit activity for existing PE fund managers.
Chart 13: Private Equity deal flow continues to surge
Speculative positioning in copper has fallen 75% since the beginning of the year following restrictions imposed by China and concerns over softening economic growth as prices in most commodities pull back from recent highs. Despite the collapse in speculative interest, copper prices have fallen just 10% from highs posted in May as the market reverts back to focusing on fundamental drivers of tight supply and new structural demand from electric vehicles and renewable energy production coming on in the near future. Citi see prices rising back above $10,000 before year end.
Chart 14: Speculative copper trades fall