Citi's Max Layton: Crude Oil and Copper Poised for Further Declines

Commodities Outlook: Crude Oil and Copper

• 📉 Crude oil and copper are not recommended for purchase by Citi clients, with significant room to move lower.
• ⚠️ The recent sharp sell-off in crude oil is attributed to new tariffs and a weakening global economic outlook.
• ⚡ Physical commodity markets are impacted by a pause in economic activity, leading to a potential near-term surplus in copper and Brent crude.
• 🎯 While this surplus may present a future buying opportunity, the immediate trend for these commodities is downward.

Gold's Performance and Strategy

• ⚠️ Gold is currently underperforming as a safe-haven asset, down 1% despite outperforming equities and other commodities recently.
• 💡 Gold typically performs well leading up to an event or shock but may not perform as strongly during the event itself.
• 🚀 Gold is expected to perform exceptionally well once policy support measures, such as tax cuts or Federal Reserve intervention, are implemented.

Copper Market Analysis

• 📉 Copper has experienced a significant price drop of around $1,200 in the past week, though it remains relatively flat over the last three months.
• ⚠️ Given the expected shift in global economic activity, copper prices are anticipated to fall materially from current levels.
• 📍 There is anecdotal evidence of support for copper prices, possibly from China, but the short-term outlook suggests a move towards $8,000.