[MARKET ANALYSIS] Crude choppy amid a lack of tangible US-Iran updates; metals trade firmer

There has been little in terms of notable geopolitical updates throughout the European morning. The main recent development is that Iran’s Secretary of the Supreme National Security Council said the Strait of Hormuz would not open until the US accepts Iran's conditions, conditions that prove unfavourable for Washington. Elsewhere, Pakistan said it continues to activate direct and indirect diplomatic channels between the US and Iran and are working to bring both sides to the negotiating table in Islamabad, whilst Pakistan remains optimistic as a mediator. WTI Sept and Brent Oct futures initially held onto mild gains amid a lack of constructive updates to resume oil flows. This morning, the IEA OMR forecasts an oil market deficit of some 1.8mln BPD in Q3, more than double the prior month’s forecast of 800k BPD. IEA also noted that although the market is projected to return to surplus towards the end of this year, risks remain substantial and the urgency of reopening the Strait has increased, as previously available inventory buffers are rapidly depleting. Note, OPEC will be releasing its oil market report at 13:00 BST, albeit the report is backwards looking. The space gradually dipped into flat territory throughout the morning. WTI resides the bottom end of a 82.73-84.35/bbl range (vs yesterday’s USD 84.61 high), while Brent trades in a USD 88.48-90.07/bbl range (vs yesterday’s USD 90.03/bbl peak). Precious metals are firmer despite a lack of newsflow in the runup to the US CPI report. The data will be key in shaping expectations for the September FOMC meeting; the weak July NFP report prompted participants to pare rate hike expectations, although the subsequent rebound in crude prices has helped push September pricing back towards a coin flip (full preview on the headline feed). Spot gold trades in a USD 4,363-4,416/oz range, within yesterday’s 4,356-4,435/oz range. Spot silver topped yesterday’s USD 66.48/oz high to currently trade towards the top end of a USD 64.71-66.61/oz range. Base metals are also firmer across the board but gains capped ahead of US CPI, whilst ongoing hopes of Chinese stimulus keep the complex underpinned. 3M LME copper resides in a USD 14,134.03-14,237.97/t range.