Commodities Were The Top Performers In 1H 2021: Halftime Report

Commodities Were the Top Performers in 1H 2021: Halftime Report

Commodities rallied 21% in the first half of 2021, making them the top-performing asset group ahead of U.S., European, emerging market, and non-Japan Asian stocks. The broad-based index of energy, agriculture, industrial metals, and precious metals rose the same amount as high-flying Bitcoin, which pulled back after hitting its all-time high of more than $63,000 on April 13.

Commodities Tied With Bitcoin as the Top Performer in the First Half of 2021

Among the commodities, we track, West Texas Intermediate (WTI) crude oil was the number one performer, up nearly 52% on higher-than-expected demand and tight supply, while precious metals lagged, with silver down 1% and gold down more than 6%.

Precious Metals Lagged in the First Six Months

This represents a nearly complete reversal from the price action we saw in 2020. According to our Periodic Table of Commodity Returns, precious metals were last year’s winners—silver surged close to 48%, gold 25%—and oil was the big loser, slipping as much as 20%.

But appetite for risk has changed now that huge segments of the economy are reopening. Demand for fuel has increased as Americans act on pent-up wanderlust: Earlier this month, a greater number of people flew on commercial jets in the U.S. than on the same day in 2019, before the pandemic. And in the days leading up to the busy Fourth of July holiday weekend, gas stations across the country were reportedly running out of gas.

After a Remarkable Turnaround, Oil Demand Sets a New Record

The last six months were a profitable time to invest in the oilfield. The S&P Oil & Gas Exploration & Production Select Industry Index gained approximately 65%.

We participated with a number of companies, including ConocoPhillips, Valero Energy, Phillips 66, and Halliburton, among others. Earnings for the second quarter aren’t expected until next month, but we believe investors will be pleased. In April, Moody’s forecast that oil companies’ earnings may rise by a median rate of 50% compared to last year—though it’s worth noting that this is off a very low base.

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Disclosure: The S &P Oil & Gas Exploration & Production Select Industry Index represents the oil and gas exploration and production segment of the S&P Total Market Index. The oil ...

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