Crude oil prices retreated from recent highs, with West Texas Intermediate futures falling from $102.45 to $99.64 before settling near $100.25. The decline reflects a market recalibration: traders are betting that Middle East supply disruptions will be short-lived, overriding concerns about tight U.S. inventories.
The primary driver is Saudi Arabia's progress in resolving its East-West pipeline, shut down last week following a drone attack. The kingdom expects to restore about half capacity within days by bypassing the damaged section. Full restoration could extend up to six weeks. Saudi Aramco has initiated prompt sales of crude from outside the Strait of Hormuz, with traders reporting the kingdom sold approximately 20 million barrels to Asian refiners this week.
Libya's restoration of normal output levels added further supply relief after earlier field outages.
U.S. inventory data presented a countervailing signal. Crude oil inventories fell 640,000 barrels last week, driven primarily by a surge in exports. The United States exported nearly 5 million barrels per day last week, its largest weekly increase since late May. Distillate fuel stockpiles rose 1.6 million barrels, with exports increasing 1.6 million barrels per day.
The structural tightness persists. Overall U.S. stockpiles remain at their lowest seasonal level in history heading into peak demand season, which begins in October. This underlying deficit provides a floor under prices despite supply disruption resolution.
European natural gas prices surged after Germany's Economy Minister Katherina Reiche directed the state-owned gas trader to acquire more gas ahead of winter. European storage facilities are approximately 68 percent full, significantly below seasonal average. Germany's facilities stand at only 56 percent capacity.
In precious metals, gold fell following the Federal Open Market Committee's decision to raise rates by 25 basis points. Gold dropped as much as 1.3 percent during the briefing, with FOMC officials reiterating inflation risks. The committee signaled another rate hike is probable this year.
Industrial metals found support despite easing market tightness. Copper cash contracts are now trading at a $37 per ton discount to three-month futures, a reversal from previous premiums. This shift may reflect U.S. traders reducing purchases as the White House delays a decision on import tariffs for refined metal.
