Market Overview:
This week, markets are running on tension. We’re seeing commodities split into two clear camps: those rallying on real scarcity (like cocoa, gold, copper) and those falling under the weight of macro uncertainty and political noise (oil, soybeans, natural gas).
Gold and cocoa are both in breakout mode. Gold pushed through $2,450 like it wasn’t even resistance, driven by falling real yields, sticky inflation, and another wave of central bank buying — led by China and India. Cocoa, meanwhile, continues to defy gravity, posting fresh all-time highs on a worsening West African supply crisis. I’m still long and still bullish.
Copper is getting interesting. It’s flirting with $10,000/ton again and feels like it wants to break. The bulls are betting on Chinese stimulus and the structural EV demand story — but inventories are still historically low, which means any supply disruption could launch it.
On the flip side, crude oil continues to unravel. OPEC’s surprise production hike this week only reinforced how fractured the alliance really is. U.S. crude stocks are stable-to-rising, and traders are losing faith in a summer demand surge. Brent looks weak here. I’m watching closely for a short entry.
Grains are mixed. Corn is still consolidating, but the ethanol and weather stories could change the tone fast. Soybeans look heavy, weighed down by record Brazilian output and soft Chinese demand. Not touching either until something breaks technically.
Overall, we’re in a split market: risk is back on in some corners, but global growth signals (PMIs, trade flows, freight rates) are still blinking yellow. This is a trader’s market — not an investor’s market. You have to be selective, fast, and willing to fade consensus.
Oil Market: Navigating the "Contango Smile"
The oil market is currently exhibiting an unusual futures curve known as "contango," where future prices are higher than current prices.This typically signals bearish sentiment and encourages stockpiling.However, despite recent bearish indicators—including increased oil production by OPEC+ and trade tensions between the U.S. and China impacting demand—the futures curve's complex shape suggests a more nuanced outlook.
OPEC+ has decided to accelerate oil output hikes for June 2025 by 411,000 barrels per day, following a similar move in May, despite falling oil prices and concerns over weakening global demand.The group's decision came after a brief online meeting where they cited healthy market fundamentals and low inventories.This output hike forms part of a planned gradual unwinding of a 2.2 million barrels per day cut agreed in December 2024, with total increases of 960,000 bpd from April through June, reducing the cut by 44%.These changes occur amid pressure from U.S. President Donald Trump and internal tensions over compliance, as Saudi Arabia pushes for stricter adherence to quotas, especially from Iraq and Kazakhstan, which have underperformed.Brent crude prices dropped to a four-year low, and analysts predict further price decreases due to increased supply and global trade concerns.
A Reuters poll of 40 economists and analysts in April 2025 forecasts a dim oil price outlook due to trade tensions and potential increases in OPEC+ supply.Brent crude is projected to average $68.98 per barrel, down from $72.94 in March, while U.S. crude is expected at $65.08, decreased from $69.16.Trade disputes between the U.S. and China have negatively impacted global economic prospects and fuel demand, with tariffs leading to a recent four-year low in oil prices.Analysts estimate global crude demand growth at 860,000 barrels per day, while the IEA and OPEC have revised their forecasts to 730,000 and 1.3 million barrels per day respectively.The OPEC+ group may accelerate supply hikes in June, possibly further pressuring prices, though some experts doubt the feasibility of executing planned production increases amid weak demand.HSBC anticipates that persistently lower prices could curb supply growth, particularly in U.S. shale production, which has breakeven levels around $60 per barrel.
Natural Gas: A Bullish Outlook Amid Geopolitical Tensions
Natural gas markets are experiencing a bullish trend, driven by cold weather and geopolitical factors.Ukraine's suspension of Russian gas supplies to several European countries has added further uncertainty to the global gas market.Citigroup analysts noted that global natural gas prices have been rising since mid-December 2024 due to these factors.BMI predicts that natural gas prices will rise by about 40% in 2025, reaching $3.4 per million British thermal units (MMBtu), compared to an average of $2.4/MMBtu in 2024, driven by growing demand in the liquefied natural gas (LNG) industry and increased net pipeline exports.The US Henry Hub natural gas price is currently at $2.95/MMBtu.BMI analysts wrote, "LNG will continue to drive new consumption, supported by rising export capacity and strong demand in Europe and Asia."
Precious Metals: Gold and Silver Shine Amid Economic Uncertainty
Gold prices have hit a series of record highs, and this rally could extend into 2025.Adrian Ash, Research Director at BullionVault, stated, "Investors are optimistic about gold and silver in 2025 because they are so pessimistic about geopolitics and government debt," highlighting gold's role as a risk hedge.JPMorgan analysts also expect gold prices to rise, especially if US policies become "more destructive," such as increased tariffs, heightened trade tensions, and greater risks to economic growth.Gold had its best annual performance in over a decade last year, with prices rising about 26% in 2024, driven by purchases from central banks and retail investors.BullionVault and JPMorgan predict that gold prices will rise to $3,000 per ounce in 2025.
Silver prices have also increased, with notable gains observed in various markets.JPMorgan analysts noted, "Both silver and platinum have strong underlying supply shortage fundamentals. We believe that once base metals find a firmer footing, a catch-up trade later in 2025 could be very strong."Juerg Kiener, Chief Investment Officer at Swiss Asia Capital, stated that silver is primarily used in industrial applications, often in the production of automobiles, solar panels, jewelry, and electronics.It is also needed for building AI products and has military applications.
Industrial Metals: Copper Crunch Intensifies
China's copper inventories are rapidly depleting and could run out by mid-June 2025 due to increasing global demand and looming US tariffs, according to Mercuria, a major commodities trading firm.The United States has seen a surge in copper imports as buyers rush to purchase the metal ahead of potential levies being considered by the Trump administration.This is creating direct competition with China, driving one of the tightest supply shocks in recent history.In just one week, Chinese copper inventories dropped by nearly 55,000 tonnes to 116,800 tonnes, a record decline.The situation is exacerbated by US protectionist measures and potential retaliatory tariffs from China, particularly affecting copper scrap trade.A significant arbitrage between US and London copper prices has further incentivized traders to shift supplies to the US.Analysts warn that declining copper scrap imports could tighten Chinese supply further.Meanwhile, companies like Aurubis are investing in domestic recycling facilities in the US, suggesting a shift in market dynamics.Although market forces may eventually stabilize prices by attracting more imports, immediate competition between the US and China is intensifying the global copper crunch.
Agriculture: Cocoa Crisis and Grain Market Turmoil
Cocoa:Cocoa prices have reached record highs due to consecutive poor harvests in West Africa, driven by climate change and disease.In Ghana, 81% of the Western North region has been affected by the cacao swollen shoot virus, significantly impacting production.Production in Ghana was further hindered by cocoa smuggling and gold mining.Production generally was also impacted by cocoa growers moving away from growing the crop after deciding it did not pay enough, increased production costs, and poor management of the cocoa industry.
Grains:Corn futures began the session with the May 2025 contract trading at $4.51 ½ per bushel, after falling 4 ¾ cents in the previous session.The market remains under pressure from new tariffs, as China imposed a 15% import duty on U.S. corn, further limiting export demand.At the same time, Mexico and Canada have responded to President Trump’s 25% tariffs with countermeasures, adding more uncertainty to North American trade.Open interest in corn futures dropped by 13,760 contracts, signaling liquidation of long positions amid ongoing trade uncertainty.The U.S. Energy Information Administration (EIA) is set to release weekly ethanol production data, which could provide further direction for the market.
Upcoming Events to Watch
- May 7 – EIA Weekly Petroleum Status Report
Will offer key updates on U.S. crude inventories. A significant draw could buoy WTI and Brent after recent selloffs.
- May 10 – US CPI Release
Inflation data will be critical for precious metals, particularly gold. A hot print could fuel a flight to safety and further upside in gold.
- May 13–14 – OPEC Monthly Oil Market Report (MOMR)
Expect deeper insights into the logic behind the June output hike. Watch for revisions to demand forecasts — particularly important if global recession fears rise.
- Mid-May – West Africa Cocoa Crop Forecast (ICCO Update)
With cocoa at all-time highs, any further downward revision in Ghana/Ivory Coast yields could ignite another leg up.
- May 17 – China’s Trade Balance Data
Key for base metals and soybeans. If copper imports remain strong or surge, we could see speculative bullish momentum continue in the face of low LME stockpiles.
My Personal Take: The Real Story Behind the Oil Drama
There’s a lot of noise in oil markets right now, but here's what I think matters:
OPEC+ is panicking. The fact that they're hiking production while prices are sliding is not a show of strength — it’s a sign of internal dysfunction. Saudi Arabia is strong-arming the rest of the cartel while trying to placate the U.S. and maintain relevance as American shale grows more efficient.
Add to that the Trump administration’s tariff tantrums — which are freezing out demand from Asia — and you’ve got a misaligned market. Everyone’s pumping more, hoping the others will blink first.
I think oil is heading to $60 unless OPEC+ slams the brakes by July. If they don’t, and if global inventories build through Q2, we may even test the high $50s by summer. My play? Short oil with tight stops around $73–75 resistance. Looking to cover sub-$63.
Locked In:
- Long Cocoa Futures (July 2025 contract) @ $9,480 —
Took this position last week on the breakout above $9,000. Holding through at least mid-May, targeting $10,300+ on further crop damage reports out of Ghana.
- Long Gold (GLD ETF) —
Entered in late March. Still holding. Trimmed 20% on this recent push above $2,450 but still bullish into summer. Expecting $2,600 by July if CPI surprises or Fed rate cuts are hinted at.
Watching Closely:
- Corn —
Looking to go long July Corn contracts if we get a clean break above $4.70. Fundamentals are tightening, and ethanol data could provide the catalyst.
- Short Brent Crude via put options —
Will enter if price closes below $69 on strong volume. OPEC has lost narrative control and technicals are deteriorating.
- Copper —
Not entering yet, but if Chinese inventories fall below 100,000 tonnes this month, I’ll start building a long position via futures or FCX stock.
- Aluminum —
Staying on the sidelines, but the U.S. tariff narrative could create a sharp, short squeeze. Watching closely.
Looking Ahead: My Predictions
- Gold hits $2,600 before July
Central bank buying and weak macro data will keep up momentum.
- Cocoa sees $10,500+ in Q2
Structural supply damage + speculative momentum = fireworks.
- Brent tests $58–$60 in Q3
Demand cracks, OPEC compliance fades, and shale resilience surprises markets.
- Natural Gas hits $3.60+ by August
LNG capacity is expanding faster than forecast. Weather-driven volatility will add tailwinds.
- Corn sees a late-summer rally
After a choppy Q2, dry weather + ethanol tailwinds could push prices above $5.00.
