Citigroup: Commodities will be in bullish territory during 2017

Forget Brexit, go for raw materials. Citigroup Inc. says that it’s bullish on commodities including oil in 2017 as the impact of the U.K.’s vote to quit the European Union fades away, global growth chugs along and with markets rebalancing investors plow more cash into funds.

“Unlike last year, when commodity markets rallied through the second quarter only to fall sharply come the third as oversupply persisted, this rally looks more sustainable as physical markets have tightened considerably,” the analysts wrote from Citi. “Global demand continues to grow at a moderate rate while the pullback in capital spending is reducing not just supply growth but total supplies across nearly all extractive industries.”

Citigroup said that while the bear market in oil is now over, a bull market hasn’t yet begun. Prices are due for an increase during 2017, when oil extraction outside OPEC would fall even further.

“Citi economists see the damage to global growth from Brexit to be limited in extent and duration in 2016, while stronger growth from China and the U.S. should lift global growth for the rest of the year,” the bank said.

Read more:

• Oil fundamental and inertia can push prices to new highs
• Goldman Sachs: “Gold is a better hedge than oil in current market conditions”
• Golden years for Gold
• The end-of-year gold rally continues at full speed
• Gold goes over $ 1,500, big players with estimates for the next year