A Dynamic, Volatile Year so Far in Energy and Commodities

Calvin Ang, senior product manager for E/CTRM, Murex 
Chantal Ghobril, product marketing manager, Murex

We are experiencing sustained energy and commodities market volatility. A global supply chain is upended by geopolitical events taking place in a world where live data streaming of anything and everything seemingly becomes the new normal. T+1 or even end-of-day risk management has never seemed so out-of-touch with a trading environment while real-time decision support—from traders to the C-level dashboard—has become the no-brainer.

Is temporary instability becoming structural?

Volatility is not new to energy and commodities markets. What feels different in 2026 is that many of the forces driving this volatility are becoming structural rather than temporary. Across energy and metals, various forces feed an inherently volatile market. Several wars in the Middle East are ongoing, with plausible structural supply disruptions. Tariff wars remain headlines. There is a sustained growth of renewables in the power generation mix. All this is compounded by the AI industry’s ostensibly unquenchable thirst for energy and metals. Volatility means risk. Risk rewards those who know when and how to seize the opportunity.

Several years ago, many banks were reducing commodities activities. Today, a growing number are expanding them again, but with a much sharper focus on real-time risk, capital efficiency and operational control. Commodity trading houses are moving in parallel, expanding derivatives usage from listed derivatives to sophisticated analytics. They aim to hedge their physical trading and strengthen intraday risk governance and collateral management.

At the core of this shift is a simple reality: Market dynamics are evolving faster than many internal processes and operating models.

Power and gas: a tale of two continents

Nowhere is this dynamic more visible than in the U.S. and EU power and gas markets. The EU is ahead of the global average in renewable penetration, approaching approximately 50 percent of the power generation mix. Weather-driven volatility has thus become one of the structural elements driving short-term power prices formation. The switch of its Single Day-Ahead Coupling power market to 15-minute settlement intervals from hourly is meant to handle high variability linked to renewable energy and for intraday market alignment. A recent Middle East conflict has disrupted the major LNG supply route. The risk premium is priced into the EU reference gas price, TTF, with an observable jump in its volatility. The marginal generating unit is often a gas-fired power plant. With pay-as-clear as the pricing mechanism in the EU for the day-ahead power market, volatility from the gas market feeds (un)wittingly into the power market.

The context is slightly different in the U.S. Even if the U.S. has a lower renewable penetration, wind and solar intermittency are now large enough to materially move prices. With a different power market design, congestion plays a big part in price spikes, with locational marginal prices (LMPs) diverging sharply at times. Data center growth, estimated by McKinsey’s Global Energy Perspective 2025 report to account for 14 percent of U.S. power demand by 2030, rarely moves in tandem with the build of generation and transmission capacity. The foreseeable market impact is higher congestion costs and wider LMP spreads.

There’s a critical takeaway here: Cross-market interaction and correlation—gas and power, day-ahead and real-time market, system energy price and congestion—must be captured and monitored on a real-time basis to navigate and monetize volatility.

Metals: Orange-yellow is the new black

Electrification, batteries and data centers are playing a major role in boosting the structural demand for energy transition metals, such as copper, aluminum, nickel, cobalt and others. Copper is arguably becoming the new black, with a structural mismatch between supply and demand, thus a source of volatility. Erratic tariff policies are distorting trade flows and, in fact, have become a major source of volatility. Physical market expertise remains essential, but the risk profile is increasingly shaped by the interaction between physical flows and derivatives trading.

Precious metals deserve particular attention, especially under heightened geopolitical risk and the high debt concern of governments. Gold continues to play multiple roles simultaneously: a physical commodity; a financial asset; a proxy hedge for U.S. real rates; a source of liquidity and collateral; and, increasingly, a component of cross-asset investment strategies. Against this backdrop, gold is gaining a new digital dimension. Tokenized gold represents one of the most credible emerging applications of asset tokenization. While adoption remains nascent, these instruments are encouraging market participants to rethink how assets might be settled, mobilized as collateral and accessed by investors. The strategic challenge is not whether tokens will exist, but whether institutions can integrate them into existing operating models without creating parallel infrastructures, fragmented data flows or additional operational complexity.

For base and precious metals trading, the differentiator increasingly lies in the ability to understand and control exposures across the entire value chain, from inventory financing and physical flows to derivatives, collateral and liquidity. As volatility interacts seamlessly between physical and financial markets, fragmented risk views are no longer fit for purpose.

Looking ahead

The second half of 2026 is likely to test these capabilities further. Energy security concerns, AI-driven electricity demand, metals demand linked to electrification and geopolitical uncertainty will continue to shape energy and commodities markets.

In increasingly interconnected commodity markets, the previously cited elements interact elusively. Understanding exposures sooner, reacting faster and maintaining control when conditions change become the defining characteristics of successful trading decisions.

For traders and risk officers, the priority is clear: Connect trading, risk and operations across physical and derivatives activities so decisions keep pace with a structurally dynamic and volatile market.

Learn more about MX.3 for Energy and Commodities Trading and Risk Management.