Snapshot: WTI Crude currently trades near $112.25, still elevated given ongoing geopolitical tensions. While there has been no fresh domestic catalyst, the recent easing of tensions in the Strait of Hormuz may present some headwinds to the commodity.
- Watch for any further signals that the US and Iran are nearing a deal as this would put pressure on WTI.
- The moderately long positioning in oil increases the risk of a correction if sentiment sours.
Bias into NY: We see downside risk for WTI as the market prices in a potential resolution in the Strait of Hormuz; a break below $110 would signal further weakness. The rising US 10Y real yield (+5.0bp) also acts as a headwind.