Goldman Sachs: Widespread Shortages are Sending Commodity Markets into Backwardation

Extensive commodity shortages have sent markets into a crisis, with futures curves trading substantially below spot prices.

According to Goldman Sachs head of commodities research Jeff Currie, widespread shortages of various commodities, including oil, gas, aluminum, and copper have caused futures markets to trade in super-backwardation. “I’ve been doing this 30 years and I’ve never seen markets like this,” he said. “This is a molecule crisis. We’re out of everything.”

Investors have been paying substantially higher prices for urgent supply, with the downward sloping price curve indicating that commodities are significantly lacking in supply. Indeed, the Bloomberg Commodity Spot Index has soared to a record already this year, primarily due to skyrocketing oil prices, which have hit an eight-year high.

According to data cited by Bloomberg, diesel futures are displaying some of the strongest backwardation since 2008, with market spot prices surging over the past several weeks. Likewise, all of the six industrial metals trading on the London Metal Exchange also shifted into backwardation territory at the end of 2021, showing a rare spell of tightness not witnessed in 15 years.

Information for this briefing was found via Bloomberg. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

Video Articles

Goliath Resources Hits 10.60 g/t Gold Over 22.82 Metres, Highest Grade Results In Third Distinct Rock Package At Surebet Discovery

Four Countries Control the Fertilizer That Feeds the World | Sage Potash

$10,000 Gold Is Just A Question of Time | Florian Grummes

Recommended

ESGold Outlines $24.3 Million NPV For Tailings Reprocessing Project

First Majestic Encounters 711 g/t Silver Equivalent Over 8.0 Metres In Ongoing Exploration At Los Gatos

Related News

Goldman Sachs Forecats Q2 GDP Crashing 34% in US w/ 15% Unemployment

This morning Goldman Sachs released a new forecast for Q3 US GDP and showing a...

Tuesday, March 31, 2020, 10:16:07 AM

Rescuing Fallen Banks Mean No More Fed Rate Hikes, Says Goldman

According to Goldman Sachs, there is no longer a rationale for the Federal Reserve to...

Tuesday, March 14, 2023, 10:28:32 AM

Goldman Sachs’ David Solomon Pushes Pause On DJ Career

The world of Wall Street and DJ decks rarely mix, but for Goldman Sachs’ CEO,...

Tuesday, October 17, 2023, 06:47:00 AM

Why Goldman Sachs Says Gold is the Best Investment Right Now

Goldman Sachs is advising investors to focus on gold as the best short-term investment opportunity,...

Sunday, September 8, 2024, 09:32:00 AM

Analysis: Goldman Sachs Warns of Inflation, Recession

Goldman Sachs (NYSE: GS) Senior Chairman Lloyd Blankfein was making the media rounds this past...

Sunday, May 22, 2022, 09:00:00 AM