Crude oil prices ended their recent winning streak, with traders assessing the volume of oil currently transiting the Strait of Hormuz. Gold prices fell below $4,400 per ounce, influenced by signs of easing U.S. inflation. Aluminum continued its retreat from seven-week highs, as concerns over supply tightness abated.
Crude Oil: WTI Rally Stalls
Oil halted its recent consecutive gains, with limited progress in negotiations to end the conflict with Iran prompting traders to focus on the amount of crude moving through the Strait of Hormuz. WTI settled around $81 per barrel, following a cumulative approximate 10% rise over the previous five sessions. Futures markets have become increasingly indifferent to statements from the U.S. administration regarding the waterway, and profit-taking emerged on Thursday after the sharp price surge. "Today's movement feels more like buyers stepping aside rather than a truly bearish market stance," said Rebecca Babin, senior energy trader at CIBC Private Wealth Group. "Combined with the significant inventory build reported yesterday, there's little immediate incentive for buyers to enter the market."
Traders are evaluating the current flow of crude through the Strait of Hormuz. U.S. Energy Secretary Chris Wright stated on Tuesday that daily oil shipments through the strait averaged 9 million barrels over the past week, a figure well above many industry estimates, reigniting questions about the actual scale of any supply shortfall. Meanwhile, data from the U.S. Energy Information Administration (EIA) showed a 17.4 million barrel increase in crude inventories last week, potentially providing some short-term relief to prices. Oil partially recovered losses after Yemen's Houthi group claimed an attack on Saudi Aramco's refinery in Jizan on the Red Sea coast. Elsewhere, major producers including the UAE and Saudi Arabia are working to maintain export levels. However, with negotiations between the U.S. and Iran appearing deadlocked and both sides hardening their positions, oil remains on track for a weekly gain. Brent crude for October delivery settled 2.2% lower at $87.07 per barrel. WTI crude for September delivery fell 2.4% to settle at $81.25 per barrel.
Base Metals: Aluminum Continues to Decline
Aluminum prices fell for a second consecutive day on Thursday, after a major Middle Eastern smelter announced a faster-than-expected restart plan, easing concerns over rising supply tightness. Emirates Global Aluminium plans to return production to pre-conflict levels by the first quarter of next year, following a shutdown of its main smelter due to a March attack by Iran. Aluminum prices had slumped sharply on Wednesday following the news. Prior to Wednesday's decline, aluminum had rallied for seven straight days on dimming prospects for a deal between Iran and the U.S. to reopen the Strait of Hormuz. The owner of Australia's largest aluminum smelter received a $2.5 billion (approximately $1.8 billion) government bailout on Thursday to keep the facility operational, adding further pressure on the supply side. At the London Metal Exchange (LME) close: LME copper rose 0.1% to $14,148.5 per metric ton. LME aluminum fell 1.6% to $3,258.5 per ton. LME zinc edged down 0.1% to $3,751.5 per ton. LME nickel declined 1% to $16,776 per ton. LME tin gained 0.1% to $55,854 per ton. LME lead dropped 1.2% to $1,887 per ton.
Precious Metals: Gold Declines
Gold prices slipped below $4,400 per ounce, as signs of moderating inflation reinforced expectations that the Federal Reserve will hold interest rates steady next month. Gold fell as much as 1.5% to $4,343.91 per ounce on Thursday. U.S. wholesale inflation cooled more than anticipated in July, driven by lower energy and food costs, with money markets now pricing in less than a 40% probability of a Fed rate hike in September. While the prospect of no rate hike is typically positive for non-yielding gold, persistently high interest rates could make bonds more attractive to investors, putting pressure on the yellow metal. The U.S. is set to release more employment reports before the Fed's next meeting in September. Investors will also focus on Fed Chair John Walsh's speech at the Jackson Hole symposium later this month. Furthermore, any renewed escalation of tensions in the Middle East could lead to a resurgence in energy prices, which have been a key driver of inflation risks since the onset of the U.S.-Iran conflict. As of 4:44 p.m. Eastern Time, spot gold was down 1.3% at $4,350.02 per ounce; silver fell 1.4% to $64.42 per ounce; platinum and palladium also declined.
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