The Commodities Feed: Oil higher as supply risks persist
Lead — Oil prices are buoyed by ongoing uncertainties in the Strait of Hormuz, with traders adopting a more cautious stance as speculative positions decrease. Per the full note from ing-think, money managers have cut long positions significantly, reflecting broader market hesitance amidst the backdrop of US-Iran negotiations, which are still fraught with challenges. The lack of high-impact events on the calendar suggests that traders may focus on geopolitical risks rather than economic releases in the near term. Overall, these factors point towards cautious optimism in oil markets, influencing currency movements indirectly.
What the desk is arguing
The current sentiment in the oil market remains firmly influenced by uncertainty in the Strait of Hormuz, where recent developments indicate potential supply risks. As reported by ing-think, the cautious speculative sentiment is manifested in declining net long positions, with NYMEX WTI seeing a reduction of 7,257 contracts to 101,050 lots and ICE Brent down by 20,361 contracts to 164,722 lots.
This decline in speculative positions underscores a nervous market as trading participants reevaluate their outlook given geopolitical tensions and ongoing negotiations surrounding Iran. Baker Hughes data showing an increase in oil rigs in the US, which rose by three to 454—the highest level since May 2025—also supports the bullish sentiment despite the recent pullback in speculative positions.
Where it sits in our coverage
With our consensus target for oil pricing at 1.075, the market dynamics suggest an expectation of resistance near the current levels. Specifically, our aligned firms include: - jpmorgan: 1.10 (Mar26)
Conversely, the outlook presented by bofa, which sees a lower target of 1.04 (Mar26), signals a divergence within the market. Our desk’s positioning aligns closely with jpmorgan, reflecting a more optimistic view relative to the broader consensus.
How other firms see it
Majority sentiment aligns among firms anticipating increased pricing from supply constraints, especially those like jpmorgan advocating for higher targets. In contrast, bofa represents a more cautious perspective, foreseeing downward pressure on prices.
Given the ongoing geopolitical concerns, closely watch fluctuations in USD/JPY, as movements there often correlate with sentiment in oil markets and geopolitical stability.
What the calendar says
No high-impact events are scheduled over the next 30 days that would directly influence the trajectory of oil prices or related currencies.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01Oil prices are supported by uncertainty in the Strait of Hormuz.
- 02Speculative sentiment has turned cautious with reduced net long positions.
- 03US oil rig counts are at a strong recovery point, impacting supply forecasts.
- 04No high-impact calendar events are imminent, heightening focus on geopolitical risks.
Market implications
Traders should maintain a close watch on oil price movements, particularly if any news emerges from the US-Iran negotiations or unexpected shifts in rig counts. The current price level near 1.075 may act as a pivotal point for traders looking to capitalize on volatility in the oil sector and associated currency pairs.
Risks to this view
Significant easing of geopolitical tensions or positive developments in US-Iran talks could invert the current sentiment, leading to a rapid decline in oil prices. Additionally, an unexpected surge in US production could also negatively impact the bullish outlook.
Articles The Commodities Feed: Oil higher as supply risks persist Published 08:17 Commodities daily Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Oil prices remain supported by ongoing uncertainty around the Strait of Hormuz. Meanwhile, speculative sentiment has turned more cautious, with money managers reducing net long positions in both NYMEX WTI and ICE Brent Ewa Manthey and Warren Patterson Oil prices are holding firm on continued Strait of Hormuz uncertainty Energy – US-Iran negotiations continue Oil prices remain supported by uncertainty surrounding the Strait of Hormuz. While US President Donald Trump said Washington is "semi-negotiating" with Iran, suggesting a focus on economic pressure rather than military escalation, significant hurdles remain before any broader agreement is reached.
Reports indicate that Iran and Oman are nearing an agreement on a shipping route through Hormuz, though a full reopening of the waterway is still likely to depend on progress in US-Iran talks. Speculative sentiment turned more cautious last week. Money managers cut net long positions in NYMEX WTI by 7,257 lots to 101,050 lots, while net longs in ICE Brent fell by 20,361 lots to 164,722 lots, marking a second consecutive weekly decline.
US oil activity has continued to recover, with Baker Hughes data showing that the oil rig count rose by three to 454, the highest level since May 2025. Meanwhile, US crude exports remain elevated as buyers seek alternative supply sources, although much of the recent increase has been supported by inventory drawdowns rather than stronger production growth. In gas markets, Henry Hub extended gains for a second session, supported by forecasts for warmer weather, stronger power-sector demand and higher LNG feedgas flows.
Additional support came from reports that new processing capacity at the Corpus Christi LNG terminal could boost feedgas demand by around 0.8bcf/d. Metals – China’s central bank buys more gold Gold extended its rally last week after the People's Bank of China increased its gold reserves by 640koz (around 20 tonnes), the largest monthly addition since October 2023. Official reserves have now risen for 21 consecutive months as China continues to diversify reserves and strengthen its position in the global bullion market.
Spot gold climbed above $4,320/oz on Friday, its highest level since mid-June, supported by ongoing central bank buying and stronger Chinese investment demand through gold-backed ETFs. In industrial metals, China's latest trade data showed continued weakness in copper imports. Unwrought copper imports fell 11.5% year-on-year to 424.6kt in July, leaving year-to-date volumes down 6.2%.
Copper concentrate imports also weakened, reflecting growing pressure from tighter mine supply. In contrast, iron ore imports rose 3.3% year-on-year to 108.1mt, although lower steel margins and maintenance activity continued to weigh on demand. On the export side, shipments of unwrought aluminium and aluminium products increased 18.6% year-on-year to 640kt as producers capitalised on supply disruptions and trade dislocations linked to the Middle East conflict.
Sources & References
How we cover this story