Copper Tops Oil as Investors' Favorite Commodity

Industrial commodity prices have been on the rise again recently, and investors are expecting further increases in the future.

The latest MLIV Pulse survey shows that most people believe that the economy is improving.

Both professional and retail investors are expecting higher oil prices over the next six months. Retail traders are even more bullish than their professional counterparts, according to recent surveys.

What is your prediction for the price of WTI oil over the next six months?

The price of a barrel of West Texas oil has fallen from over $120 in the middle of last year to around $80.

Investors are more bullish on copper than they are on oil. This is despite the fact that oil is a more essential commodity.

In a separate question, both professional and retail investors identified copper as the most likely commodity to outperform when compared to oil, corn and gold. This is likely due to copper's wide range of uses in industries such as construction and electronics.

Investors were asked to choose which asset they believe will perform the best over the next year.

Copper prices have surged this year, benefiting from both short-term and long-term impulses. In the short-term, copper is seen as a highly cyclical gauge of economic activity, which is picking up as China reopens. In the long-term, copper is seen as a key metal for the transition to a low-carbon economy.

Copper is an important metal for the economy, as more industries are becoming electrified. Goldman Sachs Group Inc.'s top commodity strategist Jeff Currie has said that copper could be the tightest commodity market in the coming years.

If investors are right, this of course poses some major macro questions going forward. The big one is, what is the effect of commodity price reinflation on consumer prices? If there is significant pass-through of these price increases, that could make it more difficult for inflation to reach the Federal Reserve’s 2% goal.

A sustained rise in oil prices may also have the effect of pushing up headline inflation, creating fresh fears about inflation expectations. This dynamic was discussed by Fed Chairman Jerome Powell in the summer of 2022.

This week's MLIV Pulse survey is focused on the Fed and the debt ceiling.