Commodities Stabilise Supported by Fuel and Weather Risks

Author: Ole Hansen, Head of Commodity Strategy

Date: July 10, 2026

Key Highlights

• The Bloomberg Commodity Index has increased by 2.8% this month following a 15% correction from May to June.
• Middle East tensions have temporarily boosted crude oil prices, but traders remain cautious about a complete breakdown of the ceasefire.
• Diesel prices have surged due to Russia's export ban and supply risks from the Middle East.
• Gold has shown resilience despite rising oil prices and fears of US rate hikes, indicating a shift from capitulation to consolidation.

Market Overview

The commodity sector is stabilizing after a significant correction, with the Bloomberg Commodity Index recovering modestly. This recovery is selective, with gains primarily in markets facing supply concerns rather than a broad-based demand increase. Cocoa and coffee have risen due to adverse weather, while diesel prices have increased amid geopolitical tensions and supply disruptions.

Energy Market Dynamics

Recent geopolitical tensions in the Middle East have tested the ceasefire, leading to a temporary spike in Brent crude prices. However, the market's response has been cautious, indicating that traders are not anticipating a prolonged supply disruption. The International Energy Agency (IEA) has warned that these tensions could jeopardize the rebuilding of oil inventories, especially as global oil demand is expected to fluctuate.

Diesel Market Insights

Diesel has emerged as a critical focus in the energy market, with prices remaining elevated due to tight supply conditions. Russia's decision to limit diesel exports and ongoing attacks on its refining capacity have exacerbated the situation. The US market is also feeling the strain, with record refined product exports and declining domestic inventories.

Gold and Precious Metals

Gold has demonstrated notable resilience amidst rising oil prices and hawkish signals from the Federal Reserve. The metal appears to have transitioned from a phase of capitulation to one of consolidation, although it is not yet poised for a significant upward trend. The dollar's strength may be waning, which could impact gold prices moving forward.

Soft Commodities and Weather Risks

Soft commodities like cocoa and coffee have seen significant price movements due to weather concerns, particularly with the potential emergence of a strong El Niño. This has raised fears about production levels in key growing regions, leading to increased volatility in these markets.

Freight Rates and Market Sentiment

Global container freight rates have risen for ten consecutive weeks, driven by early holiday ordering and tariff uncertainties. However, there are signs that this momentum may be slowing as some carriers consider resuming shorter routes, which could alleviate capacity constraints.

Conclusion

The overall commodity landscape is gradually improving, but the recovery remains uneven. The current phase is characterized by selective consolidation rather than a broad-based bull market. The next critical factors to watch include stabilizing energy prices, softer yields, and potential shifts in dollar strength.

As market participants prepare for the summer holiday, liquidity may decrease, potentially increasing volatility in the coming weeks.