European Commodity Winners Last Week
VSTOXX Futures (DVJ25), +12.67%
The VSTOXX Volatility Futures Index ($VSTX), which tracks the implied volatility of the EURO STOXX 50 Index, tends to exhibit notable correlations with certain commodities during periods of high market volatility. During periods of heightened volatility and geopolitical uncertainty like the one we're in currently, gold (GCJ25) often shows a positive correlation with VSTOXX. As volatility rises, investors shift towards safe-haven assets such as this metal.
The VSTOXX reflects fear and uncertainty in the European markets. The highs we saw during March, with a peak of 23.35 on March 11, reflect this tension and for now signals a bearish mood in risk assets such as copper and aluminium. Higher VSTOXX levels reflect economic downturn fears and the current tariffs imposed from the U.S. administration are a concern for most investors as less global growth is expected.
This is a good barometer for stocks, oil, and precious metals, and only levels back below 18 would reflect a more stable and confident mood in the markets.
RBOB Blendstock (LGM25), +3.69%
The RBOB Gasoline Futures contract for June 2025 delivery has experienced a notable price increase over the past month. As the U.S. approaches its summer driving season, gasoline demand typically rises, but a much important factor is at play here. In early March 2025, the U.S. administration imposed tariffs on energy imports and the 10% tariff on Canadian energy products increased gasoline prices.
This has been one of the best-performing futures in March. Current prices are above the 10-day, 20-day, and 50-day exponential moving averages (EMAs), reflecting a solid uptrend. The steep rise from 2.077 on March 11 to the current 2.2796 represents an impressive 9.7% increase.
From here the next resistance level will be 2.32. The 10-day EMA (green line) has been a good entry point for those long traders entering on pullbacks.
Crude Oil Brent (SCM25), +3.39%
Prices are showing a clear upward trend initiated on March 11 along the entire energy sector. Brent crude remains well above the 10-, 20-, and 50-unit EMAs, and is now testing the key resistance at 75.
The 14-day Relative Strength Index (RSI) is fast approaching the 70 mark, which represents a short-term overbought level, and is currently trading above 64. This indicator has been a reliable signal for both long and short traders in the past 12 months.
The U.S. administration imposed a 25% tariff on imports from countries purchasing oil from Venezuela. The market fears this will tighten global supply, as fewer purchases of Venezuelan oil can disrupt its production levels. This explains most of the last bullish run for oil. However, the last decision by OPEC+ to gradually unwind voluntary production cuts should increase oil supply in the short term and moderate further prices increases.
Finally, the most recent reports indicated a larger-than-expected drawdown in U.S. crude inventories, suggesting robust demand an thus increasing upward pressure in prices.
European Commodity Losers Last Week
Dutch TTF Gas (TGK25), -5.09%
Over the past two weeks, Dutch TTF Gas Futures have exhibited relative stability, trading within a narrow range. As of March 28, prices hovered between €40 and €45 per megawatt-hour (MWh).
Asian spot LNG prices have declined to nearly six-month lows due to subdued demand from China and Japan, as reported by Reuters. This has increased LNG availability in Europe, stabilizing prices.European gas storage facilities were approximately 33.6% full, which are sufficient to meet current demand.
Interestingly the destruction of the metering station at Russia's Sudzha facility has not shaken the European gas markets. The market seems confident that alternative sources will be sufficient.
Current prices are below the 10-, 20-, and 50-day EMAs. Long traders should watch out for any breakout above the 10-day EMA as this has statistically been a very reliable signal on this contract. The RSI also works in this case, and is currently at 40; long traders should wait until 30 for oversold conditions.
Aluminium Hg Cash (P3Y00), -3.81%
President Donald Trump imposed a 25% tariff on all aluminum imports, up from the previous 10% which disrupted trade flows. There is evidence of weak demand from Japan with Reuters reporting a 20% decrease from previous quarter. The U.S. market looks well supplied as the UAE increased significantly exports to U.S. in March in anticipation of the tariffs.
March started very bearish for aluminium trading at levels above 2,700, levels not seen since October 2022. LME stocks are at 462,450 as of March 31, and at statistically low levels.
LME Futures and Options Investment Funds Net Positions last reading was 115,998 long contracts, which does not support the current downtrend.
On the date of publication, Cesar Marconetti did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
