Commodities Outlook: A Shift in Strategy for 2025

December 28, 2024 - 08:50

Robert Minter, director of ETF investment strategy, recently shared his insights on the commodities sector as markets brace for a new administration in 2025. He remarked that the familiar phrase "Drill baby drill" may not hold the same relevance today, stating, "But baby's all grown up." Minter emphasized that the dynamics of the U.S. oil supply have changed significantly since the first Trump administration, as private companies that once benefited from production incentives are now facing a different landscape.

He highlighted that the key drivers for increasing oil production are prices and profits, suggesting that the anticipated surge in supply may not materialize as expected. Minter projected that Brent crude oil prices will likely hover between $70 and $85 over the next year, with fluctuations largely influenced by the strength of the dollar. He pointed out that it is unlikely for both oil prices and the dollar to remain high simultaneously.

Turning his attention to gold, Minter noted that the narrative has remained consistent for the past three years. He observed a trend of ETF investors selling off their holdings while central bank investments continue to push prices upward. Minter's analysis underscores the evolving landscape of commodities as we move closer to the next presidential election.