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Pullback In Commodity Prices Sets The Stage For Next Big Move – What’s Next?

By:
Phil Carr
Published: Sep 22, 2023, 16:20 GMT+00:00

After an explosive start to September, Commodity prices have pulled back on routine end of quarter profit-taking as traders square up their positions – ready to capitalize on the markets next big move.

OPEC logo on crude oil barrels, FX Empire

In this article:

Riding the Wave: Profiting from the 2023 Commodity Surge

These big market moves have presented savvy traders with a series of highly lucrative opportunities to profit from the recent macro-driven rally as well as the huge price reversal that has subsequently followed.

The good news is that this trend is here to stay and set to continue throughout the rest of the year.

Commodity prices across the board have been on an absolute tear, since Saudi Arabia announced plans to extend its 1 million barrel per day production cut until the end of the year. A move which sent Brent Crude Oil prices soaring within striking distance of $100 a barrel.

Usually, when one Commodity goes the others follow suit, very quickly.

And that’s exactly what’s happened!

Oil’s unstoppable rally also pulled many other Commodities higher including Aluminium, Copper, Cobalt, Nickel, Lithium, Palladium, Platinum, Zinc and Uranium – which is currently trading at the highest level since 2011.

The higher Oil prices go, the more expensive it becomes for companies to mine, produce, and transport essential Commodities – opening the door to a major squeeze in prices.

Oil prices trading between $65 to $75 a barrel is considered as a “sweet spot” for producers and justifiable enough to generate lofty margins. Oil trading above that level does not incentivize mining companies and makes economic sense to simply shut down production.

WTI Crude Oil hit a 10-month high of $92 per barrel earlier this week – extended its gains by whopping 41% since mid-June. While Brent Crude Oil topped $95 a barrel to hit a fresh 2023 record high. Over the last three months, the world’s most traded Oil benchmark has racking up a stunning gain of over 49% from its 2023 lows – officially entering a new bull market.

Is the Rally Over and Has All the Money Been Made?

Not by a long shot!

Since the beginning of this year, a long list of Wall Street banks from Goldman Sachs, JPMorgan to Bank of America have described commodities as their “preferred asset class over the next decade”.

In recent days, that chorus has once again become louder with Wall Street’s biggest institutions raising price forecasts for the rest of the year and signalling pullbacks should be viewed as buying opportunities because prices won’t stay this low for long!

Commodity Price Forecast

Where are prices heading next? Watch The Commodity Report now, for my latest price forecasts and predictions:

About the Author

Phil Carrcontributor

Phil Carr is co-founder and the Head of Trading at The Gold & Silver Club, an international Commodities Trading, Research and Data-Intelligence firm.

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