Commodities Weekly: Oil Prices Face Pressure from Demand Concerns

Commodity markets showed divergent trends this week with energy prices under pressure while precious metals gained on safe-haven demand. WTI crude oil fell 3.2% to $78.45 per barrel, the lowest level in three months, as concerns about global demand growth outweighed supply constraints. The IEA revised down its 2025 oil demand growth forecast to 1.1 million barrels per day from 1.3 million, citing slower Chinese consumption and efficiency gains. OPEC+ maintained production cuts but compliance concerns emerged with several members exceeding quotas. US crude inventories rose by 3.7 million barrels, above expectations, adding to bearish sentiment. Natural gas prices remained volatile with European prices up 5.2% on storage concerns ahead of winter, while US Henry Hub prices fell 2.8% on mild weather forecasts. Base metals showed mixed performance with copper down 1.5% to $9,234 per tonne on Chinese property sector weakness, while aluminum gained 0.8% on supply disruptions. Iron ore plunged 4.7% to $108 per tonne as Chinese steel production disappointed. Precious metals outperformed with gold up 1.2% to $2,453 per ounce on Fed rate cut expectations and geopolitical tensions. Silver surged 3.1% to $29.85, benefiting from both safe-haven and industrial demand. Agricultural commodities were pressured by favorable weather conditions with corn down 2.3% and wheat falling 1.8%. The report notes that commodity markets remain sensitive to China's economic trajectory and central bank policies, with further volatility expected as these factors evolve.