Darrell Fletcher - Commodities Outlook: Oil, Nat Gas, Copper, Aluminum, Nickel, Gold & Silver

追加: 2026-04-28

[00:00:00]Hey everyone, welcome to the K report in a daily editorial on Monday, April 27th.

[00:00:05]I am chatting with Daryl Fletcher. Daryl is a managing director of commodities at Banickburn Capital Markets. Daryl runs the commodities trading desk and I bring him on every month to get a recap lay of the land of how he's watching a wide range of commodities markets and how his clients are positioning and hedging or trading these markets. Darl, we have to start with oil as we have for the last few months because this war in Iran is now entering its third month. And look, I feel like it's a tale of two stories here where you look at the crude oil price and it's still in the mid90s telling us that this conflict is still very much ongoing. Now, the argument being that if it was a bigger war, maybe oil would be much, much higher, but it's still notably higher than where it was before the war started. And remember, oil was trending down for 3 years before this war started. So, Darl, we've talked in past interviews a lot about where the current price is, what the futures price looks like, and what the forward curve looks like. What do you think is most relevant right now to watch price-wise?

[00:01:14]Yeah. Hey, thanks Corey. Exactly. It right now on the crude front, I'm watching the physical price a lot closer and than I have in the past and also watching the global benchmarks, you know, the differences between WTI, WTI crude, Brent crude, Dubai crude, but then really importantly on the dated brand, the physical price. But yeah, we I mean it's really kind of maintained on the month and we're trending higher again now. I mean year to date the broad index indexes are up about 32% SP GCSI and call it 20 25% on the spot indexes and that's all been led by energy but also in the base metals complex has been really strong too we can get into that but the broad energy complex if you look at like Bloomberg commodity energy it's up about 60%. Getting back into that benchmark look on crude year-to- date physical Brent is up 80%. And we can get into like the spot market versus forwards because that's really important right now. WTI call it up 64%. We're up a little bit here today. And then Brent's up about 70%.

[00:02:24]So yeah, we're mid 90s on WTI. Brent's pushing 109 today. I'm very interested to see where the dated Brent gets posted at the end of the day here for physical markets, but they're really important right now because it's telling you exactly what's going on now. Basically, spot physical Brent gives you what can I do today out about 30 days contracted physical oil and that's givingven you a really good reflection of how tight things are getting due to the straight shut in and the production back up. So, and then the futures market really I mean both of those numbers I referenced you're referencing June. So, you're basically saying what are we two months and forward. So, the spot price tells you what's today is the futures price really is what's our anticipation of the end of the war which I think again we've talked about this in the past. I think going forward will be much different than you know whatever the re revolution is will be gray compared to where we were. So I remain really guarded in the fronts. You know it's very headline driven. It's a really interesting question now when people say what's the price of crude because you got to be a little more granular these days in this situation.

[00:03:38]So Darl, is there an opportunity for investors here that are on the same page as you and quite frankly a lot of people we've talked to that says the oil price isn't going to come right back down to where it was before this war. Let's say in the $60 range or mid60s.

[00:03:55]There's been some destruction, some supply destruction, and quite frankly, these prices are going to remain higher, but the market forwardwise is not pricing that in even into 2027. Is there an investable opportunity for people?

[00:04:11]Agreed. Is I I think the back of the curve is lagging. You've got about a 500 million barrel hole now. And this is still working and it's going to continue to work its way, you know, from Asia to Europe into the West. I I could see and if we get into June, July, I mean miday is going to be a very crucial point for physical just because of inventories.

[00:04:34]You're pulling about 8 million barrels a day off of floating inventory. So this it's not just crude, it's gasoline, it's diesel, it's jet fuel. So I think the backs of the curves are undervalued. I really do. I mean Keller 27 crude call it 7273.

[00:04:51]I think that's undervalued from an investable perspective. You know, just maybe the broader energy companies, that's not really like from an equity perspective is not my focus. But I do feel like in general though, the forward curves are kind of underestimating the problems. If we get into June and July, it's going to be an issue. And and I keep watching for these curves to come up, but they've kind of been muted, relatively speaking. Year-to date calendar 28 cruds up 17%.

[00:05:21]and you've got a physical market that's up 80 90%. I don't think it's that fixable that quickly. And again, I think whatever we do end up with as a resolution will be different. You've got somewhere between 10 and 12 million barrels a day offline upstream production. We have diversions that aren't going to the cheapest normal routes.

[00:05:42]So, it's interesting. And you think about it, Corey, we're on the we're on the brink of driving season.

[00:05:48]So the elasticity of price here is really going to start to come into play and we are starting to see some demand destruction. But you know how meaningful that can be is is you know to be determined.

[00:06:00]>> Yeah. One thing we've pointed out too is it's been interesting watching the stocks because the stocks were very much moving in the opposite direction of oil as oil was moving lower. They benefited initially when that war started, but they've really come back down in the last little bit. And quite frankly, from the start of the war to where we're at now, XLE is pretty much flat, which is surprising. Maybe it's up a fraction, but still seems surprising when we're in a let's say almost 50% higher oil price.

[00:06:31]One other question I had for you is rig counts in the US. You would think the US would be producing more, that more rigs would be coming online because the price is higher. We haven't seen that. The rig count is flat. Why is that, Darl? What's going on here?

[00:06:48]>> That that's a really good point. I was starting to pick up on that looking at the Baker Hughes counts again last week and it's just flat. Um, you wouldn't expect that. I think it's a reflection, continued reflection of the discipline that oil and gas producers have had. You know, I think they've learned that they they're not going to get paid to increase and take on a lot of risk. So, they're being really disciplined. And you look at the forward curve again, we get back to that. It's not, you know, 72 73 for 27. So, I think they're going to be, you know, slower to move into this and really pick pick up production. If you look at an asset that is say like most, you know, oil and gas, you have this offset in natural gas and that's in a very bearish price environment right now. So, you know, you're trying to balance those risks. You're not going to overdo it. And I think it's just a good reflection and I applaud them like they they've been really disciplined on um production and and capital costs.

[00:07:44]>> Darl, let's talk natural gas then because natural gas is just not a great chart. It had a spike at the I guess tail end of last year and very briefly at the start of this year, but continues to drift lower. I'm seeing the natural gas price under $3, about 277 right now, but it's been in a downtrend for a good month, if not really two months. Natural gas just doesn't seem to be benefiting.

[00:08:11]Is this simply a seasonal issue?

[00:08:13]>> Yeah, it is. I mean, to some extent, it's funny. It was the commodity, you know, the most important commodity back in February. And now I I told one reporter I said it's like the most boring commodity in the world right now.

[00:08:25]you you've fallen down to like 250 260 on the front. You're in a very traditional shoulder season, spring shoulder season down, which you typically would see weaker prices here if you're coming out of the winter in a decent inventory position, which we are.

[00:08:42]So, yeah, I mean front, it's hard to look at front month right now year to date because you're comparing it to the middle of winter, but you know, 260 in the front productions kind of waver between this 110 to 112 BCF per day. It did take down a little bit last week. US exports are capped. You've got a lid on your ability to ship out of here LNG at 20 BCF and they're running full as as hard as they can to push that number. US April was the second warmest month on record as far as going back to inventory numbers. So you had a tripledigit build last week in inventory. I think it was 103 BCF. That's impressive for middle of April. So yeah, you've got a bearish price environment. It's being reflected in the price. Storage is at 2.06 TCF right now. We're about call it just roughly 6% 6.7% out of the one-year 5 to 6% of the five-year ahead of storage. So very healthy storage, a very, you know, modest shoulders even in terms of it being warm and not a lot of heating degree demand. So it's natural gas, Cory. It'll change. You know how it is. We were up at $67 back in February. So it will change. The forward curves and gas are really flat for their data down in that 350 370 range from 27 to 30. So there's some pretty good value out there now.

[00:10:11]Summer's chips um remainder of summer 26, summer 27, and next winter you're south of $4. So I mean valuewise, I think that's really good pricing. So Darl, I'm also curious on NAT gas too in the sense that there's so many, it sounds like bullish factors out there for natural gas in terms of potential data centers powering those as well as all these LNG terminals that are coming online, albeit a bit slower than normal. And yes, I I get the natural gas price fluctuates.

[00:10:48]There's there are always opportunities when the price spikes, but to me it just never seems like a great longerterm investment. And that's why I've shied away from natural gas. But these pricing environments are pretty low. Like where natural gas is trading right now, you have to go the whole way back to 2024 to get those sort of prices. Again, I'm just curious as to when or if natural gas will ever be in a way a more established market or one that is more of a long-term buy and hold rather than a trade.

[00:11:22]Yeah, I think as far as US natural gas Henry hub, if the LMG capacity builds out, that'll be that'll really help our export capability and you're not going to have anything really really meaningful to like 28 29 into 30, but it's also probably why that flour curve is pretty flat and guarded, albeit at good prices. I like it. I like natural gas. I think honestly I think the front might even be a little lower right now if it weren't for the fact that it's just good value and you still have the whole summer power season to be determined, you know, and as you know that can flip fast. Weather can flip really quick and we could be into a big power pool. So it's good value. It's pretty guarded right now. keep an eye on the forward curves that 27 through 30 kind of range and that's pretty flat out there right now.

[00:12:15]>> Okay, time to move over to base metals.

[00:12:17]Let's start with copper. Copper continues to be a I think very strong market. We've even seen more money come into the copper stocks, even some of the juniors. But as we're recording this, copper holding above $6. And again, it's been a pretty stable, generally rising price environment here. What's your take on the copper market and why it continues to be one of I think the stronger resource markets at least one of the bigger resource markets.

[00:12:46]>> Yeah, it's been very stable this month.

[00:12:48]I mean year to date you're up about 6% on an NME basis. I think the front's ComX is still holding around six. So yeah, copper's kind of been in the middle of the group on the base metal group. I would say the base metal group has been interesting, but that interesting piece of it has not particularly been in copper in the past month or two. It's been mainly in aluminum. We can get into that. The LMEX base index is up about 11% year to date with most of that in the past month or two primarily being pulled by aluminum.

[00:13:21]It is an odd time when daily aluminum prices, at least recently, tend to follow closer to the crude oil price than copper itself. So that's really a reflection of the fact that about 9 or 10% of aluminum production comes out of the straight as well. So that's kind of been a pull there.

[00:13:42]Aluminum's up 20% year-toate LME basis.

[00:13:46]and you add the Midwest premium in here, you're at $2.70, $280 a pound backwardated for sure because there's just a tightness in the front of the market and the spot price. So, that's kind of been the one that's been pulling most of the complex. Although, you have nickel at a two-year high today. Supply is from Indonesia and zinc's been hovering around that point too, up about 10% on the year. So another, you know, it's a, like I said, there's a lot of spillover effects due to the straight closure. Another one of those being sulfur. Uh, a lot of sulfur, probably 40 50% comes out of the straight and that turns into sulfuric acid. And you look at markets such as copper, nickel, to some extent, cobalt, they have a increasing amount of production that comes from sulfuric acid leeching. So that's kind of put a a nice floor under the whole base complex here to date again with aluminum and tin leading. Tin continues to be basically the glue for the modern electronics going forward in infrastructure. So yeah, it's been impressive. Like I said, energyy's been the big leader, but Mace metals have been really strong. though out of those base metals some of the smaller markets that we have seen aluminum nickel zinc tungsten tungsten's been on a lot of people's radar any of these again kind of longer term plays do you see this new interest sticking around for these metals or is it going to be another up and back down move maybe when this war is behind us or what have you >> well you I mean you know my opinion on this I've been I've been really constructive on the base metals complex just on a very longer term view of this transition and kind of confluence of the energy market with base metals just the needs in infrastructure battery capacity AI and just everything that's really going to pull I think the metals into this energy need space I think is very interesting and you know this is a couple decade playout but it seems like it's already in swing back on copper to your point you've moved up nicely. You know, let's say call it a one-year change of 25% on front month copper, it's holding six. But you go out on 27, you're at 640, 650 into 28. So that forward market's telling you the demand's going to be out there. So yeah, I mean, I think longer term all the base metal complex, copper, aluminum, tin are are going to be in demand. And so it'll be really interesting. I think that's going to be that confluence of metals coming into energy related needs is going to be really interesting that you know you get that pull in silver too for solar panels.

[00:16:39]>> Yeah, it just seems like recently in the last maybe three, four, five years as we've had this data infrastructure buildout. We've seen a lot more people take notice of metals and remember that we need a lot more of these metals. But I think that differs a lot from a little more than a decade ago when we had that software revolution where you didn't need a whole lot of metals to build out software. Now to support these data centers, you need a lot more metal and people are markets are at least taking note of that. Let's get to precious metals because gold and silver have unfortunately been pretty boring. Gold, silver, both very much in some wide trading ranges that they've put in throughout this whole year. They're still up on the year and historically still at very high prices, but a lot of the momentum's been lost and even short term just in the last couple months, they're in a bit of a downtrend. Lower highs and lower lows, but again, still historically valued very nicely. What do we take away from the precious metals?

[00:17:46]>> Yeah, it's interesting to your point.

[00:17:48]Gold and silver have been very rangebound. You know, you're up on the year still. I I think there's still some fallout from just how quickly everything moved last year on the gold and silver front. I don't think any of the fund like especially for gold as a fundamental store of value that those fundamentals have changed. But you had such a large move last year, it seems like it's just kind of retreading and keeping in a range right now. And I would expect that for a while still.

[00:18:16]Gold's acting more like a risk asset.

[00:18:19]And I think that's just because it's, you know, again, a little bit of a hangover from last year being treated more like a financialized asset. So post 25. So it can be a little more susceptible to these moves. But I still you know especially for gold longer term fundamentals seem to hold you know back on the broader metal space including gold though and what we're seeing in base metals too like talk about copper gold aluminum tin things like that the assets like the quality assets globally aren't what they used to be so you're you're really seeing this play out in on the equity side in the M&A space where these larger companies are looking to buy larger companies or smaller assets rather than you know organically grow new things. So because I just think the high quality assets are are as you would expect winding and the needs for these metals just continue to go higher. So again it's going to be really interesting. Darl, one final question here. Something we've talked about again is as you said, right, the huge move in gold and then even silver. We've we know that precious metals can drive a lot of the metals market anyway. They bring in they're larger markets. They bring in more investors, but now it almost seems like we're seeing a catch-up trade in some of these other metals. Look, you're on the commodities trading desk. So, is this a a reasonable thing? Could this just be what's happening where we're consolidating gold and silver gains? A lot of people made a lot of money through those runs and now they're simply just filtering some of those gains to some of these other metal sectors.

[00:19:59]>> Yeah, I mean there could there could be some just some movement of that. I I do think gold and silver and consolidation here so far this year kind of makes sense just given where we were from last year. But I really tend to, you know, follow these fundamentals closer and I think that's, you know, aluminum especially being highly affected by production. So I think that's one of the factors. Certainly some rotation into copper for the long term, but yeah, I right now precious just seems to be in a very consolidative pattern, but you know, my from my perspective, I still like longer term fundamentals on gold.

[00:20:36]>> All right, Dale, we'll wrap it up here.

[00:20:38]Always great chatting with you. Thanks for taking the time with me every month to provide really what I consider just a balanced outlook on a wide range of commodity sectors. Again, Daryl Fletcher is the managing director of commodities at Banning Capital Markets. Daryl, great chatting with you. I'll chat with you next month.

[00:20:56]>> Right. Thanks Cory.