Shares of Fortescue Metals Group Limited (ASX: FMG) were crunched on Tuesday despite a sharp lift in the iron ore price the previous night, and now it’s BHP Billiton Limited’s (ASX: BHP) turn to face the music.

BHP Billiton’s share price has been on fire recently, sparked by the rallies experienced by both iron ore and oil that caught investors (myself included) completely off-guard. From a low of $14.06 in January, the shares rose above $19 for the first time since November yesterday, hitting a high of $19.44.

But the shares actually ended the day in the red, losing 1.8%, and they’ve fallen another 3.8% again today. It could have been even worse for the Big Australian after its London-listed shares lost 6.2% overnight (although they did shed as much as 9.3% at one point). Rio Tinto Limited’s (ASX: RIO) shares have also shed 3.9% today, while Fortescue’s share price has dropped another 6.1%.

Did the market get ahead of itself?

As exciting as the iron ore and oil rallies have been for shareholders of BHP over the last couple of months, there is a chance investors have gotten ahead of themselves.

Indeed, it seems that Monday night’s rally may have been largely driven by ‘hope’, which saw Fortescue climb to its highest level since June. The problem is, supplies of both iron ore and oil still heavily outweigh global demand, making it difficult to see how any rally of this calibre can be sustained for long.

Iron ore, for instance, declined by 0.2% overnight to US$63.63 a tonne, according to data from The Metal Bulletin. By no means is that a big decline, yet it may have been enough to raise a sense of caution amongst investors, which could explain today’s falls across the sector (and those experienced around the world in other share markets overnight).

Analysts at investment bank Goldman Sachs appear to agree. According to The Sydney Morning Herald, they suggest that the iron ore rally would prove temporary while it also reiterated that oil prices would fluctuate between US$20 and US$40 a barrel. Brent oil was sitting at US$39.80 overnight, suggesting it could be nearing its highest point based on Goldman Sachs’ estimates.

What’s more, the Goldman Sachs analysts have also suggested that copper prices are set to fall. Together with iron ore and petroleum (as well as coal), copper is one of BHP’s most important commodities so this would not bode well for the miner.

Foolish takeaway

For the sake of shareholders, I sincerely hope that BHP’s shares do continue to rise. They’ve certainly had a rough trot in recent years, and it would be nice to see the big miner back on top, as it has been in recent weeks.

However, I also won’t buy any shares today. While the gains could persist, there is a lot riding on the strength of commodity prices and I’m just not confident enough that that commodity prices will rise. I may look at buying shares of BHP at some point in the future, but at least not while there are so many other attractive alternatives elsewhere in the market.

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Motley Fool contributor Ryan Newman has no position in any stocks mentioned. Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. You can follow Ryan on Twitter @ASXvalueinvest.

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.