Commodity markets remained driven by geopolitical developments and shifting macroeconomic expectations as escalating conflict in the Middle East continued to support energy prices while softer-than-expected U.S. inflation data helped precious metals recover. Military activity involving Iran, continued attacks on commercial shipping near the Strait of Hormuz, and additional disruptions to Russian energy infrastructure kept oil markets well bid, while a weaker U.S. dollar following a cooler June CPI report provided support for gold, silver, and copper despite ongoing uncertainty surrounding Federal Reserve policy.
Within the oil and energy ETF universe, performance remained broadly constructive. The Energy Select Sector SPDR (XLE) gained 0.4%, while the VanEck Oil Services ETF (OIH) advanced 0.7% as investors continued rotating into oilfield services and refining companies. Refiners were among the strongest performers, led by PBF Energy (+6.0%), reflecting historically strong refining margins as the 3-2-1 crack spread approached $68. Several natural gas-focused companies also outperformed after analysts highlighted improving long-term fundamentals, while service companies such as Williams Companies (WMB), Liberty Energy (LBRT), and Solaris Energy Infrastructure (SEI) received favorable commentary ahead of earnings season.
Natural gas prices remained relatively stable despite cooler weather forecasts across much of the Northeast and Great Lakes. Henry Hub natural gas finished Tuesday 0.2% higher before adding another 0.2% in Wednesday’s pre-market session to $2.909/MMBtu. Domestic production continues to moderate while LNG exports remain constrained after Qatar suspended cargo movements through the Strait of Hormuz. European natural gas prices extended recent gains as storage levels remain well below historical averages, and several analysts continue to project that U.S. natural gas demand could exceed domestic supply beginning in 2028, supporting a constructive longer-term outlook for the sector.
Broader commodity markets remained well supported by strength in energy despite mixed performance across metals. Oil continued to attract investor attention as military tensions escalated, while expectations for another weekly crude inventory draw and robust refining margins reinforced the bullish supply outlook. According to the latest API data, U.S. crude inventories declined by 560,000 barrels, gasoline inventories fell 1.64 million barrels, while distillate inventories rose 2.3 million barrels ahead of today’s Department of Energy inventory report. Investors will also closely monitor this week’s EIA natural gas storage report and Baker Hughes rig count for further insight into supply trends.
The energy complex remained the market leader. WTI crude oil settled 2.2% higher Tuesday at $79.84 per barrel, while Brent crude gained 1.7% to $84.73, before both contracts added another 0.6% in Wednesday pre-market trading. Markets continue to price a meaningful geopolitical premium as U.S. and Iranian military activity intensified, commercial vessels were again targeted near the Strait of Hormuz, and Ukraine expanded attacks on Russian energy assets. Offsetting some of those concerns, China’s refinery utilization fell to its lowest level in roughly a decade, reflecting softer global demand, although tightening supply expectations continue to dominate near-term pricing.
The metals and mining sector also found support after June inflation data came in below expectations, easing pressure from higher interest rate concerns. Gold rose 1.4% Tuesday to approximately $4,060 per ounce, while silver gained nearly 2.0% before both metals eased modestly in Wednesday’s pre-market session. Copper continues to outperform over the longer term, remaining more than 12% higher year-to-date, supported by structural demand from electrification, artificial intelligence infrastructure, and renewable energy investment. UBS continues to forecast a 520,000-metric-ton global copper deficit in 2026, while BMO reiterated its preference for diversified mining companies including Glencore and Cameco. Mining equities also participated in Tuesday’s rally, with the VanEck Gold Miners ETF (GDX) gaining 2.1% and the VanEck Junior Gold Miners ETF (GDXJ) rising 3.1%, while Freeport-McMoRan (+3.3%) benefited from higher copper prices and continued optimism surrounding long-term industrial demand.
Commodity markets remain increasingly influenced by two competing macroeconomic forces. On one hand, escalating geopolitical tensions continue to underpin crude oil prices and could keep energy markets volatile should supply disruptions intensify further. On the other hand, moderating inflation has improved the outlook for precious metals by reducing pressure on interest rates and weakening the U.S. dollar. As investors look ahead, today’s Department of Energy petroleum inventory report, this week’s EIA natural gas storage update, U.S. retail sales, and the Baker Hughes rig count are likely to provide the next major catalysts for commodity markets. The current backdrop continues to favor diversified commodity exposure, with energy benefiting from geopolitical uncertainty while industrial metals remain supported by long-term themes including electrification, artificial intelligence infrastructure, and global resource security.
