Oil Prices, Tariffs, and the Commodity Market Outlook

Gold and Asset Rotation

• 💡 A significant rotation into gold is observed, mirroring trends seen in crypto and other non-polar assets.
• 📈 2008 financial crisis marked a shift for central banks from net gold sellers to net buyers.
• ⚠️ The 2022 invasion of Ukraine led to the freezing of Russian central bank assets, prompting a surge in central bank gold purchases.

Oil Market Dynamics

• 🛢️ While heading into the peak demand window for July 4th, OPEC+ is committed to adding barrels to the market.
• 📉 The US rig count has fallen substantially due to lower prices and increased production costs from tariffs, indicating thinner margins.
• ⚠️ Despite OPEC+ commitments, there's no immediate shortage of oil supply, but falling rig counts suggest future impacts.

Impact of Tariffs on Commodities

• ⚖️ Tariffs are central to commodity markets, directly affecting materials like steel, aluminum, and copper.
• 📈 Concerns over tariffs on copper have led to falling LME stocks and rising US stocks as people stockpile in anticipation.
• 🌍 The global commodity market is influenced by the insatiable demand from China, but also by growing commodity intensity in other emerging markets like India, Southeast Asia, and Africa.

Commodity Bull Market Outlook

• 📊 While there's a China story, the long-term trend relies on demand from other emerging markets and the ability to extract commodities.
• 📉 Generally, commodity prices have been falling cyclically, largely driven by oil.
• 🔑 A reaffirmation of a trending commodity bull market requires more evidence, particularly concerning when shale production will stop growing.