The commodities feed: Oil higher as supply risks persist

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.

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. Steel exports rose 2.9% year-on-year to 10.1mt.

Speculative sentiment remained supportive across metals. Money managers raised net long positions in COMEX copper by 11,306 lots to 77,796 lots, the highest since February 2021, as tight physical markets and low inventories supported prices. In precious metals, managed money increased net long positions in COMEX gold to the highest level since January, while net longs in COMEX silver rose for the first time in five weeks.

Agriculture – Wheat extends rally amid Black Sea trade uncertainty

Grain markets strengthened at the start of the week, with CBOT wheat rising around 2% as renewed concerns over Black Sea exports resurfaced. Turkey briefly suspended vessel transit through the Black Sea over the weekend due to heightened security risks linked to the Russia-Ukraine conflict, although traffic has since resumed.

Supply concerns were reinforced by sharply lower Ukrainian export forecasts. Ukraine's Agriculture Ministry now expects grain exports of 29.6mt in 2026/27, down from an earlier estimate of 64.4mt, with wheat exports cut to 8.3mt from 17.6mt. Storage capacity is also becoming a growing issue, with available grain and oilseed storage reportedly at risk of being exhausted by October.

Elsewhere, French grain production is expected to weaken in the 2026/27 season. Total grain output is forecast to fall 5.2% year-on-year to 46.1mt, driven by lower wheat and corn production amid drought and adverse weather conditions. French corn output is expected to drop to its lowest level since 1980.

Positioning data showed mixed sentiment across agricultural markets. Money managers increased their net short position in CBOT wheat by 16,906 lots to 23,786 lots, reflecting continued bearish sentiment despite recent price gains. In contrast, speculative net longs in CBOT corn increased by 13,547 lots to 181,946 lots, while net longs in soybeans fell by 29,535 lots to 125,466 lots after four consecutive weeks of gains.

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