Commodities such as oil, natural gas, metals, and agricultural products continued to follow the global equity market’s decline this Monday, as fears of a U.S. recession fueled concerns about demand.
Commodities had already been affected in recent weeks, weighed down by the sluggish Chinese economy, their main buyer, with crude oil falling around 5% last week, copper hitting four-month lows on the London Metal Exchange (LME), and corn nearing its lowest level since 2020.
Oil was down around 1-1.5% this Monday in a volatile session, less than the losses in major stock indices, as fears of a U.S. recession and its potential implications for oil demand were somewhat mitigated by price support from rising tensions in the Middle East.
Geopolitical factors, such as concerns over supply disruptions in the Middle East and the growing belief that OPEC will not withdraw its voluntary production cuts, are providing relative support to oil prices compared to equities.
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Copper prices fell by more than 3%, reaching four-and-a-half-month lows, as the deteriorating demand outlook in China and the United States, the world’s two largest economies, triggered a sell-off in the metal used in energy and construction.
Gold, meanwhile, was down by 2.7%.
European contracts for gas, electricity, and coal also declined. Benchmark European gas for the next month dropped more than 5% in early trading, reaching 35.17 euros per megawatt hour.