Kenje Group KJG says it is confident that the prices of various commodities including crude oil will rise this year as the US dollar begins to weaken in the face of downward pressure on interest rates and a possible resumption of quantitative easing.

Most commodities – iron ore, copper, steel, foodstuffs, natural gas, crude oil and precious metals – are priced in US dollars. When the dollar is strong, fewer of them are needed to purchase a given quantity. Conversely, when it is weak, more of them are required to buy the same quantity.

The dollar enjoyed a prolonged bull market that began as the Federal Reserve began gradually scaling down its last quantitative easing program. It strengthened further as the Fed prepared markets for the first increase in the Fed Funds rate for nearly a decade.

“As a result, commodity prices have fallen significantly with crude oil being the most conspicuous casualty,” explained a Kenje Group KJG commodities analyst.

“As we all know, the Fed actually made good on its promise to hike rates by 25 basis points but, with investors overwhelmingly skeptical about its ability to raise rates again, confidence in the dollar has begun to waver,” he continued.

Kenje Group has maintained that the low price of oil is as much a result of the strong dollar as it is about oversupply and that any change in the strong dollar narrative would culminate in a change in the weak commodity story.

“We’ve advised clients to position themselves in commodity-related assets like miners, explorers and, in the case of precious metals, in bullion too,” said the Kenje Group KJG analyst.