Commodity prices have been volatile since last year, especially crude oil. Affected by the conflict between Russia and Ukraine, oil prices have risen all the way and broken the level repeatedly. Subsequently, due to the Federal Reserve's aggressive interest rate hike to fight inflation, the dollar continued to rise, coupled with rising fears of recession and other adverse factors, oil prices fell sharply, and now oil prices have rebounded.

Citi: Oil could fall to $60

With unprecedented geopolitical turmoil, and the world's major economies continue to tighten monetary policy, Citi believes that in this period of uncertainty, commodity prices may be widely volatile, the commodity bull market since the first half of the year may be no longer.

The deteriorating outlook for global growth and the strengthening of the US dollar are important factors dominating the direction of commodity prices today. Citi believes commodity prices could fall further in the event of a deep global recession.

Citi analyst Max Layton said in a previous research report that at present, new orders in the global manufacturing industry are decreasing, and there is a cyclical weakness in demand, so that commodity pricing will have some room to fall.

Citi also notes that commodity costs in Europe have been rising significantly faster than in the US over the past two months. European gas and coal prices are soaring, fueling fears of a European recession.

As for oil, Citi believes that in the context of the global economic recession and geopolitical tensions, even if Russian oil production falls, demand is still hit, and the oil supply and SPR release of OPEC+ are growing, Citi will increase the probability of oil prices falling from 10% to 25%.

If the global economy moves further into recession, production costs tend to fall further as profits fall and supply shrinks, Citi says. As a result, Citi expects international oil prices to fall to around $60 a barrel.

Goldman Sachs: Oil will hit 125

While Citi is bearish, Goldman Sachs, known as the "standard bearer for commodities," remains bullish on commodities, especially oil prices. In the view of Goldman Sachs, the commodities bull market is not finished, and a new round of bull market will break out at the end of the year.

Jeff Currie, global head of commodities research at Goldman Sachs, predicted in a previous research note that the S&P GSCI commodity index would rise 23.4 percent by the end of the year.

Today, he said, the stock and commodity markets are signaling to investors that demand is more persistent and commodity prices are rising, while the interest rate and inflation curves are signaling an economic slowdown and softening ahead. Until we see real commodity fundamentals soften, we continue to believe in the former, not the latter.

As for oil prices, Goldman Sachs said that despite the recent G7 agreement to impose a price cap on Russian crude, oil prices could still surge to $125 a barrel in 2023.

In an updated report, the bank warned that any price cap would be "theoretically bearish and practically bullish" for oil prices, as Russia could respond by cutting exports to G7 countries.

A team of strategists led by Damien Courvalin, head of energy research at Goldman Sachs, said that "consistent with actions taken in the gas market, Russia may choose to fight back by cutting off G7 buyers and halting production, thereby driving up global prices and its own revenues." Therefore, today's announcement does not change our bullish oil price forecast."

The Group of Seven, which includes Canada, France, Germany, Italy, Japan, the United Kingdom and the United States, announced on Friday it would impose a price cap on Russian oil by Dec. 5. Finance ministers hope the cap will reduce Russia's crude export revenues. But Goldman warned that any price cap could have a different effect in practice, as Russia could push back against the sanctions.

So far, Russia has pushed back hard against Western sanctions in the gas market. After a series of measures to reduce gas transmission, the European energy crisis has intensified, and after the G7 officially announced the price cap, the "Nord Stream 1" pipeline could not be restored after three days of supply cuts.

Russia's Gazprom also announced an indefinite halt to deliveries of gas to Europe through the Nord Stream 1 pipeline, citing the discovery of leaks in turbines and the need for additional repairs, but there was no way of knowing how long it might take to restore the pipeline.

In addition to Goldman Sachs, Christyan Malek, jpmorgan's global head of energy strategy, said in an interview with the media that oil prices will go higher as demand outstrips supply and alternatives such as coal, natural gas and renewables fail to fill the gap, and he reiterated his previous prediction that oil prices could rise to $150 a barrel.