ICE Brent held just below $90/bbl in early Asian trade, building on Monday’s rise as renewed fighting in Lebanon and reported attacks on vessels in the Strait of Hormuz kept supply-risk concerns elevated. Positioning in oil futures turned more bullish: money managers lifted net longs in ICE Brent by 76,026 lots to 240,748 lots as of last Tuesday, while gross longs rose by 51,818 lots week-on-week. In NYMEX WTI, net longs increased by 2,665 lots to 103,715 lots. US upstream activity also firmed, with the Baker Hughes oil rig count up one to 455, leaving it 43 higher than a year ago; the EIA forecasts US crude output averaging 13.8mb/d in 2026 versus 13.6mb/d in 2025, before rising to 14.2mb/d in 2027.
In metals, LME copper gained 1.7% to a record $14,396/t, extending a third-session rally and a seventh weekly advance, while the cash/3M spread widened to a $518.5/t backwardation and inventories fell for a 42nd session to 204,975 tonnes. Cochilco sees Chilean output down 2.6% year-on-year to 5.3mt in 2026, and copper was up about 16% year-to-date; money managers raised net long COMEX copper by 3,084 lots to 80,880, as COMEX gold net longs rose 9,470 to 141,868 and COMEX silver net longs slipped 755 to 10,312. In agriculture, Ukraine exported 590kt of grain in the first 12 days of August, around 30% of the pace required, even as the Danube route could reach 1.5mt per month by year-end; Rosstat reported July sales of 5.4mt of grain and legumes, up 9.1% year-on-year, with Jan–Jul sales up 24.2% to 32.8mt, including wheat up 28% to 21.8mt and corn up 21% to 3.8mt, while inventories fell 9% to 24.7mt and wheat stocks were 18.7mt, down 6.3%. Positioning shifted across CBOT, with wheat net shorts up 7,615 lots to 31,401, corn net longs down 15,176 to 166,770, and soybean net longs down 24,104 to 101,362.
Energy and Metals Trading Strategies
We believe derivative traders should maintain long positions in Brent and WTI crude oil futures to capitalize on escalating Middle East supply risks. Buying out-of-the-money call options is a smart way to gain exposure while limiting downside risk if geopolitical tensions ease. Historically, conflicts near key chokepoints like the Strait of Hormuz, which handles over 20% of global petroleum liquids consumption, trigger sharp price spikes that reward early options buyers.
However, we must balance these long positions by hedging against surging American production, which is estimated to reach a record 13.8 million barrels per day this year. The US oil rig count has risen for three straight weeks to 455, showing that shale drillers are responding quickly to higher prices. We suggest using bear put spreads on WTI as a cost-effective hedge against any sudden supply-driven price corrections.
In the metals market, we advise traders to buy front-month copper futures or enter bull calendar spreads to exploit severe near-term shortages. LME inventories have dropped for 42 consecutive days to just 204,975 tonnes, pushing the cash-to-three-month spread into a massive backwardation of $518.50 per tonne. This market structure historically signals that spot prices will continue to outpace futures, making long-dated long positions highly profitable.
We also expect copper prices to stay elevated as Chile’s output is projected to fall by 2.6% to 5.3 million tonnes this year due to operational struggles at Codelco and BHP. Meanwhile, we recommend adding to long COMEX gold positions as a defensive play against broader market volatility. Speculative gold net longs have reached their highest levels since September 2025, confirming strong institutional backing for precious metals.
Agricultural Derivatives Outlook
For agricultural derivatives, we recommend shorting CBOT wheat or buying put options to align with heavy speculative selling. Even though the Black Sea corridor remains closed and Ukraine’s exports are suffering, booming Russian sales are successfully filling the global supply gap. Russia’s wheat sales jumped 28% year-on-year to 21.8 million tonnes, proving that global grain markets have enough liquidity to depress near-term prices.
We should also reduce long exposure in CBOT corn and soybeans as money managers continue to liquidate their net long positions. Speculative net longs in corn dropped by over 15,000 lots recently, indicating a clear shift toward a more bearish sentiment. Traders can look to capture downward momentum here by buying put options or setting tight stop-losses on any remaining long grain contracts.
