While noting that industrial commodities are down sharply from a “speculative peak” in May 2006, he thinks they are currently oversold.
Mr. Melek points to strong economic indicators in China and elsewhere in the developing world, as reasons why everything from oil to base metals should make gains.
He also notes that Europe’s economy grew 2.7% in 2006, which was the best performance in six years.
Despite dipping below US$50 per barrel for the first time in 18 months, oil prices are now closer to US$60.
“With oil at $58, we reassert that there still is a bright future for energy,” Mr. Melek said, adding that the end of the heating season and relatively large oil and fuel inventories in the U.S. will put pressure on prices.
However, he thinks OPEC is both capable and committed to balancing the market.
Finally, Mr. Melek thinks better times are ahead for natural gas, demand for base metals will rise when uncertainty about the U.S. housing market fades, and gold will continue to shine in coming months.