Commodities were a push and pull between falling oil prices and rising precious and industrial metals near the end of last week. Looking forward, oil is still stretched enough in the short term that a more positive tone in the headlines could pressure prices moderately, suggests Tom Essaye, president of the Sevens Report.
Brent crude prices dropped modestly from their recent peak near $109 per barrel after Saudi Arabia announced a credible plan to restore roughly half the capacity of its damaged East-West pipeline within a few days. Full pipeline operations aren’t expected to resume for six weeks. But even the promise of partially restored capacity put downward pressure on crude prices.
Brent Crude Oil Futures
Source: TradingView
If we can get even a whiff of progress on a US/Iran ceasefire, that opens up more transit through the Strait of Hormuz and the Bab el-Mandeb — and oil can really begin to slide back toward pre-war prices. That’s especially true given recent bearish inventory data.
We just saw more supply than expected across the product spectrum. WTI crude inventories fell less than expected (-650k bbls vs. the estimate of -1.68MM bbls), while gasoline inventories rose 800k bbls compared to an expected 1.1MM barrel draw.
For the market to get real relief, though – which means Brent crude into the low-$90s or, ideally, sub-$90 – we will need to get actual progress towards not just a US/Iran ceasefire, but also broader regional calm.
