WTI Chops in Low $90s With Druzhba Pipeline/Iran News in Focus; Copper/Gold Hit One-Month Highs

Key Points

• WTI chopped in the low-$90s on Tuesday as traders monitored Druzhba pipeline/Iran nuclear deal news.
• Copper and Gold both managed to print new one-month highs, the latter briefly rising above $1,800.
• Metals traders will be monitoring upcoming US Consumer Price Index data on Wednesday.

WTI Chops in Low-$90s as Traders Monitor Druzhba Pipeline/Iran Nuclear Deal News

Oil prices were choppy on Tuesday in indecisive trade, with front-month futures of the US benchmark for sweet light crude oil, WTI, swinging between the $89 and $92.60 levels, before ending the session flat in the $90.50 area. While up about $3.50 from fresh multi-month lows printed last week around $87, WTI is still down nearly $8.0 this month and more than $30 from June highs.

News regarding a partial suspension of oil flows into Europe from Russia via the portion of the Druzhba pipeline that passes through Ukraine was in focus on Tuesday. Russian oil pipeline operator Transneft said Ukraine had suspended flows due to not receiving payments from Russia due to Western sanctions. The flows along the northern portion of the Druzhba pipeline that passes through Poland and Germany are not affected.

Analysts said the news was a reminder that global oil markets continue to face significant supply risks amid the ongoing Russo-Ukraine conflict and robust Western sanctions response. Traders will be monitoring how/whether the West implements oil price caps on Russian imports sometime later this year, which could be a major theme.

There was also lots of chatter about a new proposal put forth by the EU on Monday that attempts to breathe life back into the long-dead 2015 Iran nuclear pact. A final decision on the EU’s proposal is expected within a few weeks, European officials told the media, with the US and Iran both needing to sign off on things.

Indirect talks between the US and Iran on a potential return to the nuclear deal that was secured during the Obama administration, but scrapped under the Trump administration fell flat this year after showing signs of promise in 2021. A return to the deal could see US sanctions on Iran eased and as much as 1 million barrels per day in Iranian crude oil exports return to global markets, though analysts aren’t holding their breath.

Elsewhere, the latest private API crude oil inventory report was just released and showed a build of 2.156 million barrels, more than the expected rise of 0.073 million barrels, a sign that Wednesday’s official numbers could be bearish for crude oil markets once again.

Copper, Gold Hit New One-month Highs

Despite a somewhat risk-off tone in global equity markets and an indecisive US dollar as traders look ahead to Wednesday’s key US Consumer Price Index data, Copper was still able to trade with an upside bias on Tuesday. Prices hit a fresh one-month highs above $3.63, before pulling back to just under $3.60 to end the day nearly flat.

Copper traders will be focused on a barrage of Chinese economic data out in the next few days, including CPI, new loans, house prices and industrial production. China is the world’s largest consumer of the red metal. Gold, meanwhile, was also able to hit a new one-month high above $1,800, despite a modest rise in US yields on hotter-than-expected US Unit Labor Cost numbers for Q2, though has since pulled back into the $1,790s.