Both the aluminium and WTI crude oil markets have experienced significant selling pressure amid shifting geopolitical dynamics and tightening supply conditions. According to TD Securities, WTI crude has seen ongoing selling, primarily driven by CTA liquidation, which is nearing completion. Crude flows through the Strait of Hormuz have remained high at 6-6.5 million barrels per day over the past two weeks, keeping market sentiment bearish. Iranian shipments now account for nearly half of these transits, and floating crude in the Gulf has dropped sharply by nearly 30 million barrels during this period. Only 40 million barrels of floating crude remain, suggesting that elevated flow rates may last just another week before slowing, with Iranian flows and increased production expected to play a larger role. Global inventories are drawing down quickly, and with SPR flows and US exports likely to slow into July, inventory draws may accelerate outside the US. Petroleum product crack spreads remain robust, indicating strong demand and continued high refinery activity [1].
In the aluminium market, ING reports that aluminium led a broad metals sell-off following a sharp global equity decline and a more hawkish Federal Reserve outlook. Easing concerns over Middle East supply disruptions and improving US-Iran relations have weighed on sentiment, prompting long liquidation and a drop in aluminium net longs by 6,024 lots to 74,361 lots, the lowest since January 2023. Despite the sell-off, ING maintains a supportive view on aluminium fundamentals, expecting the global market to remain in deficit this year. Conflict-related disruptions have already removed an estimated 3 million tonnes of production, and while easing geopolitical risks may reduce some price risk premium, they do not materially alter the tight market balance. Copper net longs also fell by 3,669 lots for a third consecutive week to 57,458 lots [2].
Market reactions have been mixed, with bearish flows dominating crude oil due to high Hormuz transits and CTA selling, while aluminium and other metals faced a risk-off selloff triggered by broader equity market declines and shifting geopolitical sentiment. Both sources highlight tightening supply conditions and robust demand, suggesting that underlying market balances remain supportive despite recent price weakness [1][2].
Forward-looking statements from TD Securities indicate that crude flows may slow soon, relying more on Iranian shipments and increased production, while ING expects the aluminium deficit to persist throughout the year, even as risk premiums ease [1][2].
CONCLUSION
The WTI crude and aluminium markets are experiencing bearish sentiment and liquidation amid easing geopolitical risks and tightening supply. Despite recent sell-offs, both markets face supportive fundamentals, with crude inventories drawing down and aluminium expected to remain in deficit. Market participants should monitor supply dynamics and geopolitical developments for further direction.