Energy prices remain under pressure amid demand concerns, while copper prices get a boost from tariff uncertainty
Energy- Brent Breaks Below $70/bbl
Sentiment remains negative in the oil market, with ICE (NYSE:ICE) Brent falling close to 2.5% yesterday. It settled below US$70/bbl after briefly trading to its lowest level in three years. Rising OPEC supply and prospects for further increases, combined with ever-present tariff uncertainty, pushed the market lower.
Recent price weakness makes it difficult for US producers to “drill, baby, drill.” While prompt WTI is trading below $67/bbl, forward values are even weaker. The calendar 2026 price is trading around $63/bbl, reducing incentives for producers to increase drilling activity. If anything, we’re likely to see a bigger pullback in activity. Producers need, on average, a $64/bbl price level to drill a new well profitably, according to the Dallas Federal Reserve Energy Survey.
Weekly US inventory data was also fairly bearish. Yesterday, the US Energy Information Administration (EIA) reported that US crude oil inventories increased by 3.61m barrels over the last week. That’s a marked increase from the 1.5m-barrel decline the American Petroleum Institute (API) reported the previous day. Also, crude oil stocks at Cushing rose by 1.12m barrels. This leaves stocks at the WTI delivery hub at the highest level since November. Lower refinery rates contributed to the build, with utilisation rates falling by 0.6pp, and crude inputs dropping by 346k b/d week on week. Among refined products, gasoline and distillate inventories fell by 1.43m barrels and 1.32m barrels, respectively.
European natural gas prices traded in a volatile manner yesterday. Ultimately, prices closed lower with TTF settling 4.5% lower on the day. Positioning data shows that investment funds reduced their position in TTF by 56.5TWh to a net long of 174.8TWh, the smallest since July. It hardly helped that the European Commission delayed the release of a plan to phase out Russian fossil fuels. Some read this as a sign that a partial resumption in Russian pipeline gas is possible under a peace deal. In addition, the EU will allow some flexibility in storage targets, although member states should still aim to have storage 90% full by 1 November.
Metals – Comex/LME Copper Arb Surges
Comex copper futures surged more than 5% yesterday after US President Donald Trump proposed a 25% tariff on copper imports. The move in COMEX copper also pushed LME copper prices higher. The COMEX/LME arb widened back towards $1,000/t on the back of the news. Last week, Trump instructed the US Commerce Department to mull potential copper import tariffs. The market anticipated a relatively long investigation before tariffs are implemented. The latest indications are that the copper tariff could be enforced sooner.
China’s National Development and Reform Commission pledged to enforce production cuts in the country’s steel and oil industry. The aim would be to improve industry profitability and reduce pollution. China’s steel production remains above 1bn tonnes despite Beijing’s efforts to reduce capacity. Industry estimates suggest that cuts of around 50mt could be implemented.
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