Commodities for Tuesday, Feb. 10, 2026

Key Concepts

• Geopolitical Risk: Impact of international relations (US-Iran nuclear talks, tensions in the Middle East) on crude oil prices.
• Crude Oil Market: Performance of WTI and Brent crude, influenced by geopolitical factors and global surplus concerns.
• Base Metals: Trading trends in copper, aluminum, and gold, impacted by Chinese demand and economic factors.
• Wine & Spirits Trade: Decline in French exports due to trade tensions and weakening demand.
• Commodity Stock Performance: Analysis of Prairie Sky Royalty (PSK) and comparison to energy ETFs (ZSG), focusing on dividend policy and asset base.
• Natural Gas vs. Oil: Investment preference for natural gas due to increasing demand for electricity generation (including AI data centers) and potential weakness in oil prices.
• Energy Company Strategy: Shift in BP’s strategy away from renewables towards oil & gas, and its impact on share buybacks and debt reduction.
• ExxonMobil’s Strategy: Contrasting ExxonMobil’s focus on hydrocarbon assets and free cash flow generation.

Energy Complex & Geopolitical Influences

The energy complex is currently experiencing “guarded optimism” regarding nuclear talks between Washington and Tehran. Reuters reports an Iranian Foreign Ministry spokesperson indicated the talks allowed Tehran to assess Washington’s seriousness and demonstrated enough consensus to continue diplomatic efforts, potentially lowering Middle East tensions. However, speculation exists that US President Trump may deploy another aircraft carrier to the region to increase pressure on Iran.

Crude oil has risen approximately 11% in 2026 (both WTI and Brent contracts), despite concerns about a global surplus. Some observers believe a significant oil glut hasn’t yet been reflected in statistics.

Metals Trading & Chinese Demand

Base metals experienced selling pressure today, with gold down 0.5% from its recent high of $5500. Copper and aluminum also declined, although copper remains near record highs. This is partially attributed to the approaching Chinese Lunar New Year, with anticipation of slowing Chinese purchases. Benchmark copper in London is slipping towards $13,000 USD per ton. Despite the current dip, copper is trading in record territory due to anticipated high demand for global electricity infrastructure build-out. Prior to this, copper had risen over 2% in two sessions.

Trade Disruptions & Commodity Impacts

French exports of wine and spirits have fallen to their lowest volume in at least 20 years, driven by trade tensions and weak demand. Sales have been declining since 2022, with issues stemming from anti-dumping measures imposed by Beijing on European brandy and import tariffs on France by the Trump administration.

Prairie Sky Royalty (PSK) Analysis

Prairie Sky Royalty (PSK) is increasing its dividend by 2%. TD calls the company an “asset base that replenishes itself or grows” with nearly $2 billion in capital spent on its lands in 2025.

Interview with Andrew Phillips, President & CEO of Prairie Sky Royalty:

• Production Breakdown: Oil and liquids comprise approximately 63% of PSK’s production by volume, generating 93% of its revenue due to weak natural gas pricing.
• Liquids Growth: PSK has experienced almost four years of consecutive organic liquids growth, benefiting from capital efficiencies of producers on its lands.
• Gas Pricing: PSK’s gas pricing is primarily based on the Alberta Contract (ACO) benchmark, which has been subdued in recent years.
• Duvernay Formation: PSK’s fastest-growing acreage is in the West Shale/Duvernay formation, which is transitioning into full development mode.
• Stock Performance: PSK has lagged the ZSG energy producing ETF over five years. Phillips attributes this to PSK’s predictable cash flow and zero capital expenditure model, contrasting it with the operational leverage of companies within ZSG. He believes PSK should outperform ZSG in the long term.
• Capital Allocation: PSK is utilizing free cash flow for share buybacks and acquisitions, including a $50 million purchase of a Petro-Canada fee dating back to the early 1900s.
• US Expansion: PSK currently focuses exclusively on Canadian acreage, finding Canadian assets to be of higher quality and trading at lower discount rates.

Natural Gas & Electricity Demand

Daryl McCubrey (Veritas Investment Research) expresses a preference for natural gas stocks over liquids, citing increasing energy demand for AI data centers and the potential for continued weakness in oil prices. He argues that natural gas offers a cost advantage as a “bridge fuel” in the electrification of energy, competing with nuclear and utility-scale batteries. He believes the competition isn’t between renewables and natural gas, but rather in the capacity resource market.

BP’s Strategic Shift & ExxonMobil’s Contrasting Approach

BP is halting its share buyback program to bolster cash flow and invest in new oil and gas opportunities. This is a departure from other energy giants (Chevron, ExxonMobil, Shell) who have continued buybacks. This decision follows previous investments in renewable energy under former CEO Bernard Looney, which yielded insufficient returns.

Rob Thomas (Tortoise Capital) on BP & ExxonMobil:

• BP’s Debt Reduction: BP’s priority is now debt reduction, necessitating the suspension of share buybacks.
• ExxonMobil’s Success: ExxonMobil’s strategy of acquiring hydrocarbon properties during low oil prices (particularly in the Permian Basin) is proving successful.
• Investment Recommendation: Tortoise Capital is not currently a buyer of BP, preferring the higher quality assets and management of ExxonMobil.
• ExxonMobil’s Strengths: ExxonMobil’s strengths include its free cash flow generation, effective capital allocation, and projects in Guyana and the Smackover Field (rare earths).

Data & Statistics

• Crude Oil Price Increase: Approximately 11% increase in both WTI and Brent crude in 2026.
• Copper Price: Trading near record highs, approaching $13,000 USD per ton.
• Prairie Sky Royalty Dividend Increase: 2% dividend increase.
• Prairie Sky Royalty Capital Expenditure: Nearly $2 billion spent on lands in 2025.
• BP Share Buyback Suspension: BP is halting its share buyback program.
• French Wine & Spirits Export Decline: Lowest volume in at least 20 years.

Conclusion

The commodities market is currently navigating a complex landscape of geopolitical risks, fluctuating demand, and shifting corporate strategies. Oil prices are influenced by tensions in the Middle East and concerns about global surplus, while metals are impacted by Chinese demand. Energy companies are re-evaluating their investment strategies, with BP pivoting back towards oil and gas and ExxonMobil maintaining its focus on hydrocarbon assets. Natural gas is gaining prominence as a potential bridge fuel for electricity generation, particularly with the rise of AI and data centers. Investors are prioritizing companies with strong free cash flow and shareholder returns, leading to increased M&A activity and a focus on dividend payouts.