Crude oil fell as early signs suggested that negotiations between the United States and Iran over reopening the world's most important energy transit route were making headway.
Copper rose for a second straight week as traders focused on the demand outlook.
Gold was on track to close the week lower, with elevated energy prices pushing bond yields higher and reinforcing expectations that the Federal Reserve needs to raise interest rates further to curb inflation.
Crude Oil: WTI Drops as Traders Weigh US-Iran Hormuz Talks
Crude oil fell as early signs suggested that negotiations between the United States and Iran over reopening the world's most important energy transit route were making headway.
WTI futures dropped about 2.3%, settling near $92 a barrel and posting their first weekly decline since late August, as traders grew more optimistic that the talks would produce results.
The US and Iran are reportedly pushing for a breakthrough in which Iran would reopen the Strait of Hormuz while the US would lift its blockade of Iranian ports.
Still, the two sides have come close to a deal several times before, only for the negotiations to collapse in the end.
Signs of tight supply in the physical crude market persist, and many traders remain reluctant to adjust positions until they see a clear increase in supply.
A White House official said US President Donald Trump remains willing to negotiate with Iran, but stressed that the US does not need to negotiate because sanctions and the blockade have put it in a position of strength.
"Similar agreements have been announced many times before, but there has been little real progress," said Emily Ashford, head of energy research at Standard Chartered. "And even if there is a diplomatic breakthrough, it will not immediately restore disrupted crude shipments, bring shipping back to normal, replenish falling inventories, or boost market confidence."
During the week, conflicting signals on peace prospects, signs of rising crude shipments from the Middle East, and speculation that the US might ban diesel exports kept crude swinging back and forth.
Brent crude is still up more than 70% so far this year, adding to inflationary pressure.
Although near-month futures retreated on Friday, some widely watched indicators still showed that concerns about near-term supply remain elevated.
Among them, the Brent prompt spread, the gap between the two nearest contracts, has widened to nearly $7 a barrel from less than $1 a barrel at the end of last month.
This bullish structure, known as backwardation, is a typical feature of a tight market.
WTI November futures settled down 2.3% at $92.41 a barrel; Brent November futures settled down 2.1% at $104.32 a barrel.
Base Metals: Copper Rises for a Second Week as Traders Eye Demand
Copper rose for a second straight week as traders focused on the demand outlook.
Trading on the London Metal Exchange (LME) was light on Friday, and copper prices were little changed.
Tighter market supply supported copper near the record level reached earlier this month.
"We still believe the scope for a copper price pullback is limited and short-lived," BMO analysts wrote in a report on Friday, noting that with inventories at low levels, fabricators will find it hard to postpone purchases for long.
At the close, LME copper was little changed at $14,622.5 a ton; LME aluminum rose 0.6% to $3,268 a ton; LME nickel fell 1% to $16,329 a ton; LME zinc fell 1.4% to $3,899.5 a ton; LME tin rose 0.6% to $54,348 a ton; LME lead fell 0.3% to $1,929 a ton.
Precious Metals: Gold Set for Weekly Loss
Gold was on track to close the week lower, with elevated energy prices pushing bond yields higher and reinforcing expectations that the Federal Reserve needs to raise interest rates further to curb inflation.
Gold fluctuated between gains and losses on Friday.
Oil prices fell on Friday after rising more than 7% over the previous two trading days.
The US and Iran are reportedly discussing a phased agreement involving the reopening of the Strait of Hormuz and the lifting of the blockade on Iran.
US Treasury yields retreated from multi-decade highs, offering some support to gold.
As of 4:59 p.m. New York time, spot gold rose 0.2% to $4,284.81 an ounce; spot silver rose 0.8% to $64.2957 an ounce.
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