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The trade deal between the US and Vietnam boosted oil prices. However, with OPEC+ set to decide on August output levels, the move higher could be short-lived. In addition, 9 July marks the end of the 90-day pause in US reciprocal tariffs, leaving further uncertainty.

Energy – OPEC+ expected to go with another large supply hike
 

Oil prices moved higher yesterday, with ICE Brent settling just shy of a 3% gain on the day. Trade optimism is providing a boost to the market, following the Trump administration's announcement that it reached a trade deal with Vietnam. However, this optimism may be short-lived, with OPEC+ deciding on August production levels this weekend. The expectation is that the group will go with another large supply increase of 411k b/d. Given the uncertainty, market participants will probably not want to carry too much risk into the long US weekend.

Furthermore, next week marks the end of President Trump’s 90-day reciprocal tariff pause. We could see tariff increases reinstated on some US trading partners if trade deals are not concluded. This leaves a fair amount of uncertainty going into next week.

The latest data from the Energy Information Administration (EIA) shows that US crude oil inventories increased by 3.85m barrels over the last week, the first weekly increase since mid-May. The build was driven by a large decline in US crude oil exports, which fell by 1.97m b/d week on week. Meanwhile, crude oil imports increased by 975k b/d WoW. For refined products, gasoline inventories increased by 4.19m barrels, while distillate stocks fell by 1.71m barrels. Implied demand data was robust, showing that gasoline demand continues to increase as we move deeper into the summer driving season. The four-week average implied demand hit 9.2m b/d, up from less than 8.8m b/d at the start of June.

Metals – Central bank gold buying recovers in May
 

Central banks added a net 20 tonnes of gold to global gold reserves in May. This is 66.7% higher than the previous month, but below the 12-month average of 27 tonnes, according to the World Gold Council. Kazakhstan remained the leading buyer in May. It bought 7 tonnes, taking its net purchases so far this year to more than 14 tonnes. This was followed by the National Bank of Poland and the Central Bank of Turkey with net purchases of 6 tonnes each, taking total net purchases to 67 tonnes and 15 tonnes, respectively, in the first five months of the year.

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