Commodities Wrap 10 August: Oil Surges 5 Percent on Hormuz Doubts While Silver Shines

By The Edge Research Team

Energy led commodities sharply higher on Monday, with crude and refined products surging around 5 percent as doubts grew that the United States and Iran will reach a deal to increase tanker traffic through the Strait of Hormuz, per CNBC. Brent crude settled up 5.07 percent at 87.79 dollars a barrel and West Texas Intermediate 5.14 percent at 82.20 dollars, per CNBC, a move that leaves Brent within 14 cents of its level before the OPEC+ production decision, erasing that slide in five sessions, our calculation.

In energy, heating oil was the clear outperformer, surging 7.42 percent to 4.1921 dollars a gallon, per CNBC, decisively outpacing crude, while RBOB gasoline rose 4.96 percent to 3.1334 dollars, broadly matching the crude advance, and natural gas jumped 4.88 percent to 2.792 dollars per million British thermal units. The catalyst was diplomatic, per CNBC’s reporting: the US president told Axios that Washington is “only semi-negotiating” with Iran, indicating reliance on naval pressure rather than further strikes, while Iran denied holding direct talks on reopening the strait and set conditions of its own. The market that had spent a week unwinding the OPEC+ supply increase spent Monday repricing the risk that Gulf transit stays constrained for longer.

In metals, silver extended its run, jumping 3.12 percent to 65.48 dollars an ounce, per CNBC, while gold rose 0.81 percent to 4,435.50 dollars, a fresh push above last week’s post-jobs-report levels. Copper added 0.47 percent to 6.622 dollars a pound and palladium 0.38 percent to 1,383.50 dollars, while platinum eased 0.26 percent to 1,755.10 dollars, the complex’s only decline.

In agriculture, cocoa was the standout, climbing 2.09 percent to 6,018 dollars a tonne, per CNBC, while soybeans added 0.34 percent to 1,180.25 cents a bushel and sugar was little changed at 16.46 cents a pound after last week’s surge. Corn was unchanged at 462.00 cents, wheat slipped 0.04 percent to 639.50 cents, coffee eased 0.22 percent to 315.20 cents and cotton fell 0.75 percent to 83.77 cents.

In rates and currencies, the oil move set an inflationary tone. The 10-year Treasury yield rose 4 basis points to 4.698 percent and the 30-year to 5.243 percent, per CNBC, while the US dollar index firmed 0.25 percent to 99.791 and the yen weakened to 159.14 per dollar. The VIX climbed 3.42 percent to 15.41, Bitcoin fell 2.14 percent to about 63,756 dollars, the Egyptian pound was steady near 49.83 per dollar, and the Kuwaiti dinar held at its official reference of 0.3071 per dollar.

Why it matters: Monday flips the week’s story two days before it gets tested, our reading. Friday’s jobs shock pulled rate expectations down and lifted everything rate-sensitive; Monday’s energy surge pushes inflation risk back in the other direction, and the same session’s tape shows the collision: yields up, the dollar up, the VIX up and Bitcoin down even as oil rallied. The detail that matters is heating oil’s surge of more than 7 percent, decisively ahead of crude’s 5, which is what acute fuel-supply concern looks like rather than a general risk bid. And the speed cuts both ways: a market that erased the OPEC+ slide in five sessions on a diplomatic doubt can reverse just as quickly on a diplomatic breakthrough, which makes the current price a measure of headline risk as much as of barrels.

Outlook: The sequencing is unusually tight, our reading. Tuesday brings the EIA’s Short-Term Energy Outlook, the first official forecast update since the OPEC+ decision and now a read on how the agency weighs constrained Gulf transit. Wednesday delivers July US consumer prices at 3:30 PM Kuwait time, where Monday’s energy move sharpens the stakes, followed by the EIA’s weekly inventories. The markers are whether Brent reclaims and holds its pre-OPEC+ level, whether heating oil’s premium to crude persists, and whether any renewed diplomatic progress takes the risk premium back out as fast as it came in.

Table – Energy, 10 August, ranked by change:

Table – Metals, 10 August, ranked by change:

Table – Agriculture, 10 August, ranked by change:

Table – Rates, currencies, volatility and crypto, intraday 10 August, ranked by percent change:

Sources: CNBC.

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