Commodity markets remained active as geopolitical developments, central bank expectations, and supply concerns continued to shape investor sentiment. Energy prices extended their recent rally amid heightened tensions in the Middle East and concerns surrounding the Strait of Hormuz, while precious metals benefited from a softer U.S. dollar and growing expectations that the Federal Reserve may remain on hold. Industrial metals were mixed as investors balanced strong long-term demand expectations against profit taking following recent gains.
Oil & Gas
The energy sector continued its strong momentum, with crude oil prices climbing for a fifth consecutive session. West Texas Intermediate (WTI) crude rose 3.3% to $88.67 per barrel while Brent crude gained 2.9% to $94.27, reaching their highest levels in roughly a month. The rally has been driven primarily by escalating geopolitical tensions involving Iran, ongoing concerns over shipping through the Strait of Hormuz, and continued attacks on Russian energy infrastructure. Additional support came from reports that China has increased purchases of Iraqi crude while U.S. naval escorts continue assisting commercial tankers through the Gulf. Meanwhile, natural gas slipped 1.8% overnight as cooler weather forecasts tempered demand expectations, although analysts continue to warn that supply risks heading into winter remain elevated should geopolitical disruptions persist. Investors are also awaiting the latest EIA natural gas storage report and updated seasonal weather forecasts for additional direction.
Energy equities have also participated in the recent strength. Exploration & Production ETFs have posted impressive monthly gains approaching 10%, while broader energy sector funds continue to benefit from improving crude prices and healthy cash flow generation across the industry. Oil service companies remain more mixed, reflecting ongoing questions around future drilling activity despite stronger commodity prices.
Metals & Mining
Metals markets presented a mixed picture following yesterday’s strong rally. Gold eased modestly on light profit taking but continues to benefit from expectations that the Federal Reserve may leave interest rates unchanged after softer inflation and labor market data. UBS upgraded its outlook for precious metals to moderately overweight, citing improving macroeconomic conditions and declining expectations for further rate hikes, while simultaneously trimming its outlook for industrial metals following recent strength. Silver continued to outperform precious metals with another solid advance, while copper pulled back slightly despite remaining up more than 13% year-to-date. The mining sector continues to see encouraging corporate activity, including exploration success, uranium production growth, and long-term supply agreements for critical minerals such as cobalt and rare earth elements.
ETF performance reflected continued investor interest in precious metals. Gold miner ETFs have surged more than 36% over the past month, while silver miner funds have also delivered exceptionally strong returns. Copper and diversified metals & mining ETFs remain positive over the medium term as investors continue positioning for increased infrastructure spending, electrification, and artificial intelligence-related demand for industrial metals.
