Crude retreats amid diplomatic speculation
Oil prices declined, with ICE Brent finishing more than 1% lower, as market participants weighed signals that Washington and Tehran may still reach a negotiated agreement. Reports suggested Iran is prepared to move swiftly toward a deal ahead of another round of talks scheduled for Thursday.
At the same time, the United States continues to reinforce military assets in the region. With President Trump’s previously stated 10–15 day deadline approaching in early March, geopolitical risk remains elevated. The prospect of military action, should negotiations fail, is keeping a sizeable risk premium embedded in prices.
Large US inventory build pressures market
Fresh data from the American Petroleum Institute showed US crude inventories rose by 11.4 million barrels over the past week, far exceeding expectations for a 1.9 million barrel increase. Gasoline and distillate stocks declined by 1.5 million and 2.8 million barrels, respectively.
The market now awaits official figures from the Energy Information Administration. A similarly strong crude build would represent the largest weekly increase since February 2024.
In the Permian Basin, Midland crude has widened its discount to Houston to about $0.80 per barrel, the steepest gap since November 2024. Scheduled maintenance on the Wink to Webster pipeline in early March is weighing on regional pricing dynamics.
Attention is also turning to the upcoming OPEC+ meeting on 1 March. Despite balance sheet indications that additional supply is not required, the group is widely expected to resume output increases from April given recent market strength.
Copper rebounds as China returns
Industrial metals showed renewed momentum after Chinese market participants returned from the Lunar New Year holiday. Copper on the London Metal Exchange moved back above $13,000 per tonne, supported by stronger import demand.
The Yangshan copper premium rose to $53 per tonne, a two month high, signaling firmer buying interest. However, inventory levels remain elevated. Both SHFE and LME stocks are still ample, and time spreads on the LME remain in deep contango, reflecting comfortable nearby supply.
While improved Chinese demand may gradually absorb excess material, sustained tightening will likely require visible inventory draws in both domestic and international markets.
Latest LME positioning data show that funds trimmed net long copper exposure to 33,882 lots, the lowest level since October 2023. Net long positions in aluminium and zinc were also reduced.
Cocoa extends decline
In agricultural markets, US cocoa futures fell below $3,000 per tonne for the first time since April 2023. Improved weather conditions in West Africa have supported supply prospects and driven a rise in US exchange warehouse stocks to 2.13 million bags, the highest level since September 2025.
At the same time, Ivory Coast production for the current season is projected at 1.6–1.7 million tonnes, below last season’s 1.85 million tonnes, according to official estimates. Despite this moderation in output, near term supply conditions appear sufficient to keep downward pressure on prices.
