Analys
A moment in markets – The evolving investment narrative surrounding metals


Investors are certainly not oblivious when it comes to expectations of a post-pandemic global economic recovery and the budding chatter about a new commodity supercycle. But the investment narrative for metals is evolving. Due to their growing use in emerging technologies, metals are increasingly being seen as thematic investments.
Figure 1: Aluminium prices have outpaced the industrial metals basket recently

For the cyclical upswing
While growing demand from technological megatrends – such as the energy transition – is lengthening the perceived shelf life of metals as investments, cyclical tailwinds do not hurt. In our commodities outlook for 2021, we highlighted four key themes expected to influence commodity prices this year. They include reflation, infrastructure spend driving a structural recovery, an increased focus on the environment, and weather patterns affecting agricultural commodities. The first three have a direct bearing on the outlook for metals.
Reflation relates to a combination of improving industrial demand and accommodative fiscal and monetary conditions. Broad baskets of commodities are favoured within this theme. The pandemic may, however, even encourage governments to start plugging the $15 trillion infrastructure gap to induce economic growth. This can add impetus to the industrial metals sector. Additional support may come from targeted climate focused investment – an example of which is Joe Biden’s $2 trillion plan to build a sustainable clean energy future. While these themes may unfold over the next few years, they are expected to gain more traction in the coming months.
For the megatrends
Industrial metals are the raw materials for many tech related megatrends. There is a growing recognition among investors that equities are not the only way to access these themes. For example, copper’s use in passenger electric vehicles is forecast to rise from less than 0.5 million tonnes (Mt) in 2020 to over 2.5Mt by 2035. The need to build lighter vehicles is also expected to draw higher quantities of metals like aluminium. Similarly, higher loadings of nickel are likely to be used in batteries to power these vehicles. Batteries are expected to account for 30% of nickel demand by 2040 – up from around 5% today. The recent strength in these metals appears to be symptomatic of the growing interest in electric vehicles globally.
Precious metals with industrial applications are relevant to the discussion too. Silver’s use in battery operated electric vehicles ranges between 25-50 grams (g) per vehicle compared to 25-28g for internal combustion engine vehicles. Silver’s automotive demand may rise to 88 million ounces (Moz) by 2025 compared to 51Moz in 2020 as electric vehicles proliferate on the roads. Similarly, if fuel cells are adopted by automakers as a viable source of energy for cars, demand for platinum may rise meaningfully given the metal is used both as a catalyst inside the fuel cell as well as in the production of hydrogen.
Ways to access metals
Investors have options. Exchange traded products typically offer an exposure to front month industrial metals futures. When commodity prices rally sharply, front month exposures generally appear favourable. Enhanced approaches seek instead to maximise the positive roll yield when futures curves are in backwardation and mimimise negative roll yields when futures curves are in contango. The benefits of such approaches are typically seen over longer periods.
When it comes to precious metals, however, many investors prefer physical exposures as precious metals are also perceived as stores of wealth – or providing greater protection against equity and bond market downturns. Silver held in exchange traded products (ETP) currently stands close to record highs of just under 1 billion troy ounces compared to around 0.6 billion troy ounces a year ago. The same is true for ETP holdings of platinum which stand around 3.9 million ounces compared to around 3.5 million ounces a year ago.
The metals mentioned here do not constitute an exhaustive list. They do, however, offer an illustration of how metals are not just for tactical investors interested in the cyclical recovery, but also appeal to long term investors keen to access growing themes in differentiated ways.
By: Mobeen Tahir, Associate Director, Research, WisdomTree
Analys
Tightening fundamentals – bullish inventories from DOE

The latest weekly report from the US DOE showed a substantial drawdown across key petroleum categories, adding more upside potential to the fundamental picture.

Commercial crude inventories (excl. SPR) fell by 5.8 million barrels, bringing total inventories down to 415.1 million barrels. Now sitting 11% below the five-year seasonal norm and placed in the lowest 2015-2022 range (see picture below).
Product inventories also tightened further last week. Gasoline inventories declined by 2.1 million barrels, with reductions seen in both finished gasoline and blending components. Current gasoline levels are about 3% below the five-year average for this time of year.
Among products, the most notable move came in diesel, where inventories dropped by almost 4.1 million barrels, deepening the deficit to around 20% below seasonal norms – continuing to underscore the persistent supply tightness in diesel markets.
The only area of inventory growth was in propane/propylene, which posted a significant 5.1-million-barrel build and now stands 9% above the five-year average.
Total commercial petroleum inventories (crude plus refined products) declined by 4.2 million barrels on the week, reinforcing the overall tightening of US crude and products.


Analys
Bombs to ”ceasefire” in hours – Brent below $70

A classic case of “buy the rumor, sell the news” played out in oil markets, as Brent crude has dropped sharply – down nearly USD 10 per barrel since yesterday evening – following Iran’s retaliatory strike on a U.S. air base in Qatar. The immediate reaction was: “That was it?” The strike followed a carefully calibrated, non-escalatory playbook, avoiding direct threats to energy infrastructure or disruption of shipping through the Strait of Hormuz – thus calming worst-case fears.

After Monday morning’s sharp spike to USD 81.4 per barrel, triggered by the U.S. bombing of Iranian nuclear facilities, oil prices drifted sideways in anticipation of a potential Iranian response. That response came with advance warning and caused limited physical damage. Early this morning, both the U.S. President and Iranian state media announced a ceasefire, effectively placing a lid on the immediate conflict risk – at least for now.
As a result, Brent crude has now fallen by a total of USD 12 from Monday’s peak, currently trading around USD 69 per barrel.
Looking beyond geopolitics, the market will now shift its focus to the upcoming OPEC+ meeting in early July. Saudi Arabia’s decision to increase output earlier this year – despite falling prices – has drawn renewed attention considering recent developments. Some suggest this was a response to U.S. pressure to offset potential Iranian supply losses.
However, consensus is that the move was driven more by internal OPEC+ dynamics. After years of curbing production to support prices, Riyadh had grown frustrated with quota-busting by several members (notably Kazakhstan). With Saudi Arabia cutting up to 2 million barrels per day – roughly 2% of global supply – returns were diminishing, and the risk of losing market share was rising. The production increase is widely seen as an effort to reassert leadership and restore discipline within the group.
That said, the FT recently stated that, the Saudis remain wary of past missteps. In 2018, Riyadh ramped up output at Trump’s request ahead of Iran sanctions, only to see prices collapse when the U.S. granted broad waivers – triggering oversupply. Officials have reportedly made it clear they don’t intend to repeat that mistake.
The recent visit by President Trump to Saudi Arabia, which included agreements on AI, defense, and nuclear cooperation, suggests a broader strategic alignment. This has fueled speculation about a quiet “pump-for-politics” deal behind recent production moves.
Looking ahead, oil prices have now retraced the entire rally sparked by the June 13 Israel–Iran escalation. This retreat provides more political and policy space for both the U.S. and Saudi Arabia. Specifically, it makes it easier for Riyadh to scale back its three recent production hikes of 411,000 barrels each, potentially returning to more moderate increases of 137,000 barrels for August and September.
In short: with no major loss of Iranian supply to the market, OPEC+ – led by Saudi Arabia – no longer needs to compensate for a disruption that hasn’t materialized, especially not to please the U.S. at the cost of its own market strategy. As the Saudis themselves have signaled, they are unlikely to repeat previous mistakes.
Conclusion: With Brent now in the high USD 60s, buying oil looks fundamentally justified. The geopolitical premium has deflated, but tensions between Israel and Iran remain unresolved – and the risk of missteps and renewed escalation still lingers. In fact, even this morning, reports have emerged of renewed missile fire despite the declared “truce.” The path forward may be calmer – but it is far from stable.
Analys
A muted price reaction. Market looks relaxed, but it is still on edge waiting for what Iran will do

Brent crossed the 80-line this morning but quickly fell back assigning limited probability for Iran choosing to close the Strait of Hormuz. Brent traded in a range of USD 70.56 – 79.04/b last week as the market fluctuated between ”Iran wants a deal” and ”US is about to attack Iran”. At the end of the week though, Donald Trump managed to convince markets (and probably also Iran) that he would make a decision within two weeks. I.e. no imminent attack. Previously when when he has talked about ”making a decision within two weeks” he has often ended up doing nothing in the end. The oil market relaxed as a result and the week ended at USD 77.01/b which is just USD 6/b above the year to date average of USD 71/b.

Brent jumped to USD 81.4/b this morning, the highest since mid-January, but then quickly fell back to a current price of USD 78.2/b which is only up 1.5% versus the close on Friday. As such the market is pricing a fairly low probability that Iran will actually close the Strait of Hormuz. Probably because it will hurt Iranian oil exports as well as the global oil market.
It was however all smoke and mirrors. Deception. The US attacked Iran on Saturday. The attack involved 125 warplanes, submarines and surface warships and 14 bunker buster bombs were dropped on Iranian nuclear sites including Fordow, Natanz and Isfahan. In response the Iranian Parliament voted in support of closing the Strait of Hormuz where some 17 mb of crude and products is transported to the global market every day plus significant volumes of LNG. This is however merely an advise to the Supreme leader Ayatollah Ali Khamenei and the Supreme National Security Council which sits with the final and actual decision.
No supply of oil is lost yet. It is about the risk of Iran closing the Strait of Hormuz or not. So far not a single drop of oil supply has been lost to the global market. The price at the moment is all about the assessed risk of loss of supply. Will Iran choose to choke of the Strait of Hormuz or not? That is the big question. It would be painful for US consumers, for Donald Trump’s voter base, for the global economy but also for Iran and its population which relies on oil exports and income from selling oil out of that Strait as well. As such it is not a no-brainer choice for Iran to close the Strait for oil exports. And looking at the il price this morning it is clear that the oil market doesn’t assign a very high probability of it happening. It is however probably well within the capability of Iran to close the Strait off with rockets, mines, air-drones and possibly sea-drones. Just look at how Ukraine has been able to control and damage the Russian Black Sea fleet.
What to do about the highly enriched uranium which has gone missing? While the US and Israel can celebrate their destruction of Iranian nuclear facilities they are also scratching their heads over what to do with the lost Iranian nuclear material. Iran had 408 kg of highly enriched uranium (IAEA). Almost weapons grade. Enough for some 10 nuclear warheads. It seems to have been transported out of Fordow before the attack this weekend.
The market is still on edge. USD 80-something/b seems sensible while we wait. The oil market reaction to this weekend’s events is very muted so far. The market is still on edge awaiting what Iran will do. Because Iran will do something. But what and when? An oil price of 80-something seems like a sensible level until something do happen.
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