Standard Chartered says record bullish bets by trend-following funds are limiting how far crude can rally, even as Brent and WTI both climbed Monday on renewed U.S.-Iran tension. The bank says another leg higher now needs a fresh physical supply shock, not more momentum buying, while diesel and gasoline prices in the U.S. keep climbing.
Crude oil prices rebounded Monday as diplomacy between Washington and Tehran produced little concrete progress. Brent crude for November delivery rose 1.70% to $106.09 a barrel at 4:30 p.m. ET. WTI added 0.95% to trade at $93.29 a barrel over the same period.
Positioning is already maxed out
Standard Chartered says the rally is now constrained by ultra-bullish positioning among money managers and will only regain momentum if the physical market takes a deeper hit from the war. Commodity Trading Advisors are positioned at maximum long across Brent, WTI and the major refined product markets, a setup the bank says it has recorded only a handful of times in the past decade. As a result, further gains now depend on discretionary or physical buyers stepping in, not additional momentum buying.
Crude also faces higher odds of consolidation or sharp liquidation if flows through the Strait of Hormuz normalize, or if Saudi exports recover further. Still, StanChart splits the risk in two directions: a drop would come from funds unwinding crowded longs, while a rise now requires a genuinely new physical shock, such as further infrastructure damage or a sustained cut to Hormuz flows.
Refined products are already tight
U.S. retail diesel prices have crossed $6.50 a gallon, up 83% year to date and nearly a dollar higher than last month. Gasoline is closing in on $4.50 a gallon, up 58% year to date, with CTA long positioning in refined products also at its maximum.
Trump has twice tied the price spike to disruption in Russia's refining system this month, first urging Ukraine to stop striking Russian energy infrastructure, then saying Russia had lost control of its diesel industry because of the war. Restoring that lost capacity would still take months, StanChart says, even if Ukraine halted strikes immediately. The bank ties the physical risk picture directly to Washington and Tehran: the system currently holds almost no cushion, so a fresh escalation could tighten supply within days, while de-escalation would need weeks or months of recovering flows before the balance loosens.
European gas holds its rebound
European natural gas steadied at €74.26/MWh on Monday after dropping toward €70/MWh last week on unverified reports that Iran might reopen the Strait of Hormuz. StanChart calls that earlier drop premature, since no agreement or reopening timeline has been confirmed by either government and European gas fundamentals haven't actually changed. Europe's storage still trails normal levels by a wide margin, a gap the bank expects to keep a floor under prices.
Source: Oilprice.com
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