Commodity markets are beginning the week with diverging trends as crude oil retreats from elevated levels, European natural gas remains exposed to significant supply risks, and precious and industrial metals receive some support from reduced expectations for further Federal Reserve tightening.
WTI crude trades at $90.27 per barrel, down 0.92%, while Brent stands at $101.78, declining 0.46%.
The pullback follows Saudi Arabia's decision to reduce the November price of its Arab Light benchmark grade for Asian buyers to $5 per barrel below the regional benchmark, its lowest level since 2020, as flows through the Strait of Hormuz continue to recover.
This has offset some of the geopolitical pressure created by intensified fighting in Yemen. OPEC+ maintained November production levels at its latest meeting, while Russian officials continue to characterize global oil markets as experiencing high volatility and a supply shortage. Crude held in floating storage has increased 2.6% week-on-week to approximately 97 million barrels.
US natural gas remains well supplied. Henry Hub trades at $3.023/MMBtu, while inventories increased by 64 Bcf during the latest week. Hedge funds have increased bearish positions to their highest level in six years amid expectations for a relatively mild winter.
Europe presents a sharply different picture. TTF gas prices have risen for a fourth consecutive session, while storage levels stand at only 72% of capacity compared with a five-year seasonal average of 88%.
LNG flows through the Strait of Hormuz improved during September but remain below pre-war levels. North Asian spot LNG prices remain around $25/MMBtu, more than double pre-war levels, although weak Chinese demand is limiting further price increases. Colder European weather expected later this week could provide additional support to gas demand.
Gold has stabilized after its largest weekly decline since June. Spot gold trades at approximately $4,153 per ounce, up 0.29% in the latest session after falling 3.4% last week.
The metal remains under pressure from elevated US Treasury yields and a stronger Dollar, but Friday's weak employment data has reduced expectations for additional Fed tightening. ETF demand continues to provide structural support, with year-to-date net purchases reaching approximately 2.02 million ounces and total ETF gold holdings at their highest level since August 2022.
Silver is outperforming gold in the latest session, gaining 1.67% to $61.37 per ounce. Improving Chinese manufacturing data is supporting expectations for industrial demand from electronics, solar, and manufacturing, although elevated US yields and a strong Dollar remain broader headwinds.
Copper has also recovered modestly, with COMEX futures gaining 0.44% to 657.75 cents per pound following their largest weekly decline since March.
The softer US employment report has provided some support by reducing Fed tightening expectations, while supply conditions remain important. Chilean copper production fell in August to its lowest level since February 2011, with labor disputes and operational disruptions creating additional uncertainty. Weak Chinese industrial data, however, continues to represent a demand-side constraint.
Iron ore remains under significant pressure. The Singapore benchmark fell to a two-year low of $91.10 per ton following ten consecutive sessions of declines, the longest losing streak since 2015. Record seasonal port inventories in China, declining Chinese steel production, and abundant seaborne supply continue to underpin the bearish market backdrop.
