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2026-10-21 13:56:07 Goldman Sachs published a research report stating that the BCOM commodity basket has delivered a total return of 36% so far this year, outperforming equities and especially bonds. The bank continues to recommend maintaining a positive allocation to commodities from both tactical and structural perspectives, despite its base-case expectation that crude oil and European natural gas prices will retreat after Middle East supply adapts to high supply and shipping disruption risks. The bank noted that three tactical factors support holding long commodity positions as a portfolio hedge: upside risks to energy prices, elevated sensitivity of bond and equity prices to energy prices, and upside risks to agricultural product prices. Under its base-case scenario, Brent crude oil and European natural gas prices are expected to fall to USD90 per barrel and EUR70 per megawatt-hour, respectively, by the end of 2026. However, geopolitical escalation, damage to energy infrastructure, or a severe European winter could still significantly push up energy prices. If Middle East supply falls short of expectations, Brent crude could rise to USD140 per barrel in early 2027, with the 2027 average at around USD125 per barrel. If Persian Gulf LNG exports fail to recover to above 25% of normal levels and winter temperatures are one standard deviation colder than average, TTF could rise to EUR150 per megawatt-hour by year-end. The bank believes many spot energy prices have already priced in substantial risk premiums, and therefore prefers targeted energy hedges with greater upside asymmetry and more attractive valuations, including long positions in European summer 2027 gasoline futures and TTF European natural gas 1Q27 call spreads. Structurally, as supply concentration rises, alongside US-China competition in artificial intelligence and geopolitics, as well as broader geopolitical fragmentation, commodities can provide portfolios with insurance against supply disruptions. Commodities facing rising demand amid persistent supply constraints are also under structural upward pressure, especially copper, gold and certain power markets. The bank expects that, based on annual averages, LME copper prices will rise further from slightly below USD10,000 per tonne last year to USD15,400 next year, around 7% above spot prices currently.(da/u)~ AASTOCKS Financial News Website: www.aastocks.com This article was automatically translated by AI, the Chinese version should be considered the authoritative version. AASTOCKS.com Limited does not guarantee its accuracy or completeness and accepts no liability for any damages or losses arising from the use of this translation. | |