The outbreak of COVID-19 has been accompanied by widespread declines in global commodity prices. The pandemic represents a unique shock that has a major impact on both the demand and supply of commodities. Oil markets have been most affected, given the collapse in travel arising from mitigation measures, and have seen an unprecedented collapse in demand and steepest one-month decline in oil prices on record. Metals prices have also fallen, albeit less than oil, while agricultural prices have been much less affected so far given their indirect relationship with economic activity.
Over the short-term, in addition to weaker demand, disruptions to supply chains could cause dislocations in commodity markets, with food security a key concern. The ultimate impact of the pandemic will depend on its severity and duration, but it is likely to have lasting implications. Changing consumer behavior could cause a structural shift in work patterns, reducing travel and demand for fuel. An unwinding of complex global value chains may occur, which could reduce commodity demand.
Despite all those mentioned facts, Ritva’s IB team keep earning continuous profits by taking the advantages of the market uncertainty.
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