[MARKET ANALYSIS] Energy benchmarks move lower as the indirect talks between the US and Iran get underway

A contained start for the energy complex, but with modest pressure emerging across the European morning. As the benchmarks pullback from the highs in yesterday’s session and the brief, but within existing ranges, uptick seen in the US late-afternoon as tensions flared somewhat. Currently, the waiting game continues amid the Doha gathering, but there is a positive skew to current expectations as the US and Iran are expected to hold in-direct talks and after President Trump’s openness to extending deadlines over taking military action.
As the morning progressed the downside extended with participants looking to the Doha indirect meeting, and indeed sources since suggest that has commenced, no move on that latest report. Kushner and Witkoff are reportedly not involved in the technical exchange.
Action that pushed Brent to a USD 71.62/bbl base, printing a fresh WTD low and falling below the USD 71.93/bbl trough from last week. The next leg higher/lower will potentially be determined by the readout and/or sources around the talks, before we look to possible comments from President Trump or others on the state of relations.
Spot gold saw pressure overnight, moving below the USD 4k/oz handle once again. The yellow metal is currently trading at the bottom-end of a USD 3,960-4,018/oz range, with the trough approaching the WTD low at USD 3,942/oz range. The recent pressure has been attributed to the markets’ continued hawkish shift at the Fed, stronger USD and rising US yields. Price action for the remainder of the day will be dictated by key US data (ADP/ISM Manufacturing) and Fed Chair Warsh.
Base metals are entirely in the red, following the subdued risk sentiment seen in Asia, which has filtered through into the London session. 3M LME Copper (-1.67%) has traded lower throughout the day, and currently holds at the bottom end of a USD 13,134.08-13,384/t range.