Commodity Market Recap Week #28

Last Week’s Commodity Highlights and How to Predict What’s Next

Dear Readers of The Merchant’s News,

Welcome to your weekly briefing.

As of July 14th, the narrative is one of two completely different stories. A massive rally has propelled copper to multi-month highs, with silver and gold also posting significant gains. This suggests a powerful "risk-on" sentiment is building, driven by Trump's 50% tariff on copper imports. Meanwhile, oil prices remain locked in a tight range, hovering near the $70 mark as traders weigh the positive demand signals from China against persistent inflation fears in the West.

Corporate fortunes are being reshaped by these moves. Mining giants are poised to reap the benefits of soaring metal prices, shifting their outlook from cautious to bullish. Conversely, Big Oil continues to navigate a landscape defined by stability and a focus on shareholder returns, with their stocks showing resilience but lacking the explosive momentum seen in the materials sector.

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Agenda
Here’s what we’re going to talk about:

• 📈 Energy Markets: A look at the subtle shifts in oil and natural gas prices and the forces at play

• 🏢 Oil Majors: The latest stock performance and strategic buzz around BP, Shell, Chevron, and Exxon Mobil

• ⚙️ Metals & Minerals: Tracking the movements in gold, silver, and key industrial metals like copper

• 🌍 Global Miners: An update on how Glencore, Rio Tinto, and BHP are navigating the economic landscape.

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📈 Energy Markets: A Game of Push and Pull

The energy complex is caught in a crossfire of competing narratives. Aggressive supply increases from OPEC+ are colliding with a mixed demand picture, while the strategic pivots of the world's largest oil companies signal a cautious long-term outlook.

Crude Oil: The OPEC+ Gambit and the Global Demand Question

The supply side of the oil market is currently dominated by the strategic decisions of the OPEC+ alliance, which has shifted its focus toward regaining market share. Eight key members of the group, including Saudi Arabia and Russia, are accelerating the reversal of their voluntary production cuts. After implementing monthly output hikes of 411,000 barrels per day (kb/d) through May, June, and July 2025, the coalition has announced an even larger increase of 548 kb/d for August. By August, this will bring the total restored supply to over 1.9 million barrels per day (mb/d) since the unwinding began in April. This clear policy shift toward prioritizing volume represents a significant bearish pressure on prices.

The demand outlook, however, is far less certain. Major forecasting agencies are pointing to a slowdown. The International Energy Agency (IEA) projects that global oil demand growth in 2025 will be its weakest since 2009 (excluding the pandemic year of 2020), at a mere 700 kb/d, citing particularly lackluster consumption in emerging markets. J.P. Morgan Research echoes this caution, forecasting demand growth of 800 kb/d. Yet, pockets of strength persist. In the United States, gasoline demand proved robust around the July 4th holiday, jumping 6% to 9.2 mb/d.

This fundamental tension explains why Brent crude is trading at $71.80 and WTI at $69.00—well off their highs but not in a state of collapse. The market is successfully absorbing the additional OPEC+ barrels, finding a floor from resilient consumer demand in key economies and a persistent geopolitical risk premium that has not fully dissipated.

Beneath the surface of the official OPEC+ announcements, signs of fraying discipline present a further bearish risk. While the plan is for a coordinated unwinding of cuts, compliance is becoming an issue. Kazakhstan has been reported to be "openly defying quotas," and Iraq has a history of overproduction. Furthermore, the United Arab Emirates was granted a special dispensation to increase its output by an extra 300 kb/d, separate from the group's coordinated hike. This suggests a "prisoner's dilemma" may be unfolding, where individual members have a strong incentive to maximize their own production to capture revenue before prices potentially decline further. Consequently, the actual volume of oil hitting the market may exceed the official announcements, which could exert more downward pressure on prices than currently anticipated.

The U.S. Barrel: A Deep Dive into Inventories, Production, and Refining

The U.S. energy market provides a granular view of the supply-demand balance, with weekly inventory data driving significant price movements for WTI crude and natural gas.

For the week ending July 4, 2025, the Energy Information Administration (EIA) reported a surprise build in U.S. commercial crude inventories, which rose by 7.1 million barrels to a total of 426 MMbbl. This was a stark reversal of analyst expectations, which had forecast a draw of 2.1 million barrels, and represents a clear bearish signal for WTI crude prices.

However, the picture for refined products was decidedly bullish. The same EIA report showed that gasoline stockpiles fell by 2.7 million barrels, nearly double the anticipated draw of 1.5 million barrels. This significant drawdown was driven by a 6% surge in gasoline demand to 9.2 MMbpd, reflecting strong consumption during the Independence Day holiday week. This bullish signal for demand helped crude futures to pare some of their losses following the release of the bearish headline inventory number.

In the natural gas market, inventories for the same week increased by 53 billion cubic feet (Bcf), bringing total working gas in storage to 3,006 Bcf. This injection was in line with the five-year average for the week, but it leaves total stockpiles 6.1% above the five-year average, indicating a well-supplied market. The price of the front-month Henry Hub futures contract reflected this comfortable supply situation, trading around $3.475/MMBtu.

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