World Bank Sees Commodity Slide; Gas Pops Up 2026!

Introduction

Two recent developments are reshaping near-term thinking across commodities: the World Bank’s October outlook pointing to further declines in commodity prices through 2026, and a sharp, weather-driven jump in U.S. natural gas futures in mid-November. Together they illustrate a clear macro trend — broad price pressure — alongside persistent micro shocks that can create fast-moving opportunities and risks for specific sectors.

World Bank Forecast: Broad Price Pressure Through 2026

The World Bank’s October commodity outlook projects another 7% decline in commodity prices for both 2025 and 2026, extending a multi-year slide. Energy is expected to lead the pullback, while agriculture and many base metals are seen as steady to slightly softer. Precious metals stand out as the notable exception, retaining support from safe-haven demand amid geopolitical uncertainty.

Energy: The Primary Driver

Energy prices — oil and some refined products — are central to the World Bank’s projected drop. Oversupply dynamics, weaker demand growth in advanced economies, and more efficient energy use are cited as underlying factors. For consumers and policy makers this can translate into easing headline inflation pressure, but for producers it means tighter margins and potential capital discipline.

Metals and Agriculture: Mixed, But Muted

Non-energy commodities are not expected to rise sharply. Many industrial metals face demand softness tied to slower manufacturing growth, while crop markets reflect ample global inventories and stable trade flows. That said, localized supply shocks and trade policy shifts can still produce episodic price volatility in specific commodities.

Precious Metals: A Safe-Haven Outlier

Gold and silver are forecast to outperform broader commodity indices, buoyed by geopolitical risks and investor appetite for safe assets. This divergence highlights how macro uncertainty can lift precious metals even as broader commodity prices drift lower.

Natural Gas: A Short-Term Spike in a Longer Downtrend

On November 19, U.S. natural gas futures jumped roughly 4.1%, with the NYMEX front-month contract settling near $4.55/MMBtu. The move was driven by a cold-snap forecast that raised expectations for heating demand and a seasonal storage draw—estimates around a 12 Bcf withdrawal were cited—despite resilient U.S. production.

Immediate Drivers: Weather and Storage

Natural gas is inherently weather-sensitive. Short-lived forecasts for colder temperatures can trigger outsized moves because of tight storage mechanics and the near-term nature of demand for heating and LNG feedgas. In this case, a sharp but temporary weather pattern amplified a price response even as the broader commodity complex sees downward pressure.

Why This Matters Beyond Gas Traders

Short-term gas spikes ripple through related markets: utilities face higher procurement costs, LNG exporters adjust cargo economics, and industrial consumers may alter production schedules. For portfolio managers, such episodic volatility can provide trading opportunities or prompt hedging adjustments, while reminding risk managers that idiosyncratic shocks persist even during wider price deceleration.

Practical Implications and Takeaways

• For policymakers: A continued softening in commodity prices supports easing headline inflation pressures, potentially affording central banks more room to calibrate policy. However, localized spikes (e.g., in energy) require vigilance to avoid sectoral stress.
• For producers: Energy firms should plan for prolonged lower-price environments while retaining flexibility to capitalize on episodic price upticks driven by weather or supply disruptions.
• For consumers and supply-chain managers: Lower commodity averages may reduce input costs, but short-term price shocks necessitate active hedging and contingency planning, particularly for energy-intensive operations.
• For investors: Broad commodity indices may face headwinds, but targeted plays—precious metals for diversification and selective energy or weather-sensitive trades—remain relevant.

Conclusion

The World Bank’s outlook frames a multi-year softening across many commodity groups, offering disinflationary implications for the global economy. Yet the natural gas spike shows that short-run, supply-demand imbalances—often weather-driven—can still produce meaningful, localized price moves. Successful navigation of the current environment requires balancing an appreciation of the long-term downward pressure on aggregate commodity prices with readiness for rapid, commodity-specific shocks.

Policy makers, corporates, and investors should treat the World Bank’s forecast as a guide for strategic positioning while using targeted risk management and tactical tools to handle episodic volatility in sectors such as natural gas.