Commodities Weekly Summary: February 20, 2026
In the latest commodities report, the Bloomberg Commodity Index rose approximately 1.7%, driven by geopolitical tensions, supply concerns, and resilient demand, despite a seasonal lull due to the Lunar New Year. The index has increased by 9% year-to-date and 15% over the past year.
Key Highlights
- Energy Sector: Crude oil prices surged to a six-month high amid rising tensions in the Middle East, particularly concerning Iran's nuclear negotiations. The market is experiencing a significant risk premium, with traders hedging against potential supply disruptions.
- Precious Metals: Gold prices consolidated within a range, supported by geopolitical factors but limited by stronger yields and a robust dollar. Silver showed some outperformance but remains technically constrained.
- Industrial Metals: The Lunar New Year reduced trading activity, particularly in China, leading to a quiet market. Copper prices fell due to high inventories, while iron ore futures hit a seven-month low.
- Agricultural Markets: U.S. wheat prices rose due to weather concerns and geopolitical risks, while cocoa prices plummeted over 50% this year due to high prices curbing demand.
Market Dynamics
The report indicates a shift in focus from equity volatility to geopolitical risks and monetary policy. The Federal Reserve's cautious stance on rate cuts has supported bond yields and the dollar, which has implications for commodities, particularly gold.
Despite the dollar's recent strength, bearish sentiment towards the dollar is at record levels, suggesting potential for sharp counter-trend rallies if U.S. economic data surprises positively.
Outlook
Looking ahead, three main themes are expected to dominate the commodity markets:
- Geopolitical Risks: Continued tensions in the Middle East may sustain a risk premium in crude oil and refined products.
- Macro and Dollar Dynamics: The crowded bearish positioning against the dollar could lead to volatility in commodity prices.
- China's Demand Post-Holiday: Signals from industrial metals demand following the Lunar New Year will be crucial for price direction.
Overall, the commodity complex is benefiting from structural supply constraints and geopolitical uncertainties, supporting the case for maintaining exposure to commodities and commodity-linked equities.