Copper and Oil: Two Ways to Win if the Economy Runs Hot

Copper rolls at a factory in China. Prices for the industrial metal are moving up again. (STR/AFP/Getty Images)

Copper could be poised for more gains in 2026 if the economy runs “hot.” Oil is a tougher bet, but there’s a contrarian case for it to recover.

Those views come from Bank of America whose strategists see gains for commodities in 2026. The idea is that the global economy will shake off President Donald Trump’s tariffs, while a mix of interest rate cuts and growth from AI and other areas will fuel growth, pushing up demand for natural resources like copper and oil.

BofA strategists said in a note Friday that their favorite “run it hot” asset class for 2026 is to be “long oil/energy.” BofA also made a case for copper earlier in the week, saying “tech strength, supply disruptions, and stockpiling could boost base metals, especially copper and aluminum.

Copper prices are hovering around $5.45 a pound in the U.S., still below a recent all-time high of about $5.95 from July. But prices have momentum, gaining about 10% in the past month and nearly 20% in the past three months.

“Copper prices have broken out of their short-term trading range,” said Katie Stockton, founder of Fairlead Strategies, in a report Friday, adding that momentum “supports sustained intermediate-term strength within copper’s secular uptrend.” The next test: whether copper can get back to $5.90 and break through its highs from July.

Concerns about copper shortages may also be driving up prices. A recent jump in requests to withdraw copper from London warehouses exacerbated fears over a global shortage, noted LPL Financial chief technical strategist Adam Turnquist in a report Friday.

The spike in prices has been a boon for mining stocks. The Global X Copper Miners ETF is up nearly 15% in the past month while shares of top miner Freeport-McMoRan have gained 20% since early November.

Analysts at Turning Point Market Research are also bullish on copper, saying in a report on Thursday they have “constructive view of metals amid expanding AI and electrification requirements.”

The case for oil is dicier. A global supply glut isn’t expected to ease in 2026 and could get worse if Russia and Ukraine strike a peace deal, unleashing Russian barrels and refined products on the global market. Much of Wall Street is bearish on oil seeing Brent stuck in the $60s or drifting down into the $50s.

BofA, however, says “long despised oil/energy [is] without question the best ‘run-it-hot’ contrarian trade.” Their strategists note that bearish hedge fund positioning in oil futures is the most in 15 years. Oil could bounce after a Ukraine-Russia fix while China keeps the yuan cheap, they point out.

Investors can get exposure to the commodity through a fund like or an exchange-traded fund like the State Street Energy Select Sector SPDR ETF.

Granted, this is a deeply contrarian idea. If you’re looking for a cheap commodity play, though, oil may fit the bill more than copper.

Write to Paul R. La Monica at paul.lamonica@barrons.com