Energy – Oil climbs on fresh US-Iran clashes
ICE Brent and NYMEX WTI moved higher on Friday morning after three straight sessions of losses, amid reports of renewed clashes between US and Iranian forces. Brent rose nearly 3% to just below USD 103/bbl. The rebound followed US strikes on Iranian military targets after Iran fired on three US Navy destroyers in the Strait of Hormuz. While tensions have escalated, the US has signalled no immediate intent to intensify the conflict and is reportedly still awaiting Iran’s response to a proposal to reopen the trade route.

Looking ahead, oil prices are likely to remain highly headline‑driven, with the recent escalation reinforcing the risk premium. With flows through the Strait of Hormuz unlikely to normalise quickly, markets remain exposed to further upside on any setbacks in diplomatic efforts.

In refined products, Insights Global data shows refined product stocks in the ARA region fell by 108kt week-on-week to 4.5mt in the week ending 7 May. The draw was led by gasoline (‑72kt to 1.1mt) and gasoil (‑34kt to 1.8mt). Gasoil stocks fell for a fifth consecutive week, hitting their lowest level since August 2025, underscoring ongoing supply tightness. Naphtha inventories also declined by 17kt to 374kt, the lowest since March 2025, amid disruption linked to the Strait of Hormuz closure. By contrast, fuel oil and jet fuel stocks rose modestly by 9kt and 6kt to 665kt and 558kt, respectively.

In Singapore, inventories fell by 1.1mbbl to 44.8mbbl, the lowest level since July 2025, as US-Iran tensions curtailed Middle Eastern exports. The decline was driven by middle distillates (‑0.8mbbl) and light distillates (‑0.6mbbl). Residual fuel stocks, however, increased by 387kbbl to 19.9mbbl.

In natural gas, EIA data shows US gas storage rose by 63bcf last week, below market expectations of around 73bcf and the five‑year average build of 77bcf. Total inventories stood at 2.2Tcf as of 1 May, around 6.7% above the five‑year average. The smaller‑than‑expected build supported prices, with front‑month Henry Hub contracts up more than 2% to around USD 2.8/MMBtu.

Metals – China buys more gold
Gold edged higher as signs of renewed buying interest emerged, supported by ongoing central bank demand and persistent geopolitical risks in the Middle East. China’s central bank remains a key structural support, with April marking another month of official reserve accumulation.

The People’s Bank of China reported its largest monthly gold purchase in over a year in April, extending its accumulation for an 18th consecutive month. Official reserves increased by 260,000 troy ounces (around 8 tonnes), the biggest monthly addition since December 2024. The continued buying underscores China’s strategic push to diversify reserves and reduce reliance on US Treasuries. Ongoing central bank demand has helped underpin market sentiment, even as some buyers – including Turkey’s central bank – have recently turned to gold sales to support domestic currencies.

While recent US-Iran military escalation has lifted safe‑haven demand, gains have been tempered by a still‑restrictive macro backdrop, with elevated real yields, a firm US dollar, and reduced expectations for near‑term Federal Reserve easing continuing to cap the upside.

Agriculture – Cocoa gains on weak supply prospects
Cocoa futures extended gains for an eighth consecutive session – the longest rally since February 2024 – settling around 7% higher. The move was largely driven by short covering, alongside rising concerns that a developing El Niño could disrupt output in key producing regions. Hotter and drier conditions associated with El Niño raise risks for West Africa and Indonesia at a critical stage of the crop cycle. Elevated fertiliser and fuel costs continue to weigh on farmers in Côte d’Ivoire and Ghana, while analysts have revised lower global surplus forecasts amid growing confidence in a stronger El Niño.

Meanwhile, USDA weekly data shows US grain export sales remained weak in the week ending 30 April. Soybean sales fell to 147.4kt, down from the prior week and well below last year and market expectations. Corn sales also declined to 1,484.5kt, while wheat exports came in at 266.3kt, both below year‑ago levels. Export activity could improve in coming weeks as the 14 May meeting between Presidents Trump and Xi is expected to provide greater clarity on future Chinese buying.
Source: ING