The commodities feed: Oil rebounds as geopolitical risks linger

Oil prices edged higher this morning after falling below $90/bbl yesterday, supported by lingering US-Iran uncertainty despite bearish inventory data.

Energy – Oil edges higher as Middle East uncertainty persists

Oil prices edged higher in early trading today after falling below $90/bbl yesterday. While expectations of improving Middle Eastern supply availability and bearish US inventory data have weighed on the market, uncertainty around the US-Iran conflict continues to provide some support.

US inventory data added to the bearish tone. API figures showed crude stocks increasing by 9m barrels last week, compared with expectations of a draw of around 0.6m barrels. Inventories at Cushing rose by 182k barrels, while gasoline stocks were broadly unchanged and distillate inventories increased by 1.5m barrels. Attention now turns to official EIA data due later today.

The latest EIA outlook also points to continued growth in US supply. The agency marginally lowered its 2026 crude production forecast to 13.86m b/d, still around 200k b/d higher year-on-year, while its 2027 forecast remains at 14.3m b/d, implying growth of roughly 440k b/d. US petroleum demand is expected to remain broadly flat at 20.6m b/d this year before increasing to 20.9m b/d in 2027. The EIA also raised its gasoline and diesel price forecasts for next year, reflecting continued tightness in fuel markets.

There are also signs that Middle Eastern producers expect supply conditions to improve. ADNOC has reportedly reduced the premium for December-loading Murban crude to $4/bbl, following price reductions from Saudi Aramco. The EIA expects most Middle Eastern production outside Iran to recover to pre-conflict levels by the middle of 2027.

However, supply risks have not disappeared. Reports of further damage to Russian energy infrastructure following Ukrainian drone attacks add another source of uncertainty, with several refineries reportedly facing disruptions since late October.

For now, developments in the Strait of Hormuz remain the key driver for the oil market. An improvement in regional flows would allow more of the geopolitical premium to unwind, although continued disruptions leave the market vulnerable to renewed upside.

Metals – Gold recovers as physical demand provides support

Gold edged higher in early trading on Wednesday after coming under pressure from a stronger dollar and a sharp rise in US Treasury yields. Hotter-than-expected US inflation data has reinforced expectations that the Federal Reserve could raise rates again in December, creating another near-term headwind for the precious metal.

However, gold continues to find support around $4,000/oz. Central-bank purchases and firm Asian physical demand are helping cushion the impact of tighter monetary policy expectations. While uncertainty over the Fed’s next move could keep prices volatile in the short term, underlying demand remains supportive.

Meanwhile, speculative positioning across base metals remained subdued. The latest COTR data showed net bullish positions in copper falling by 1,094 lots to 34,449 lots as of 6 November. Aluminium net longs declined by 430 lots to 86,442 lots, driven largely by a 10,218-lot increase in gross shorts. Zinc saw a further reduction in bullish positioning, with net longs falling by 463 lots to 27,361 lots, the lowest level in more than a year.

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