Oil Price Rally Capped by Money Manager Bets

Oil prices rebounded from their recent slide on fears of U.S.-Iran escalation after attempts at diplomacy yielded mixed results. Brent crude for November delivery was up 1.70% to trade at $106.09 per barrel, while the corresponding WTI crude contract was up 0.95% to change hands at $93.29 per barrel.

In a defiant speech to the United Nations, Iranian leader Masoud Pezeshkian blamed the U.S. for starting the war and stoking global instability. He set seven preconditions before returning to talks, including a release of frozen funds and an end of the war on all fronts.

Oil and commodity experts at Standard Chartered reported that the oil price rally is currently constrained by ultra-bullish positioning by money managers. The systematic bid that pushed crude higher has little room left to run, though.

Crude faces higher odds of consolidation or sharp liquidation if flows through the Strait of Hormuz normalize, or if Saudi exports recover further. US retail diesel prices have crossed $6.50 per gallon, up 83% year to date and nearly a dollar higher than last month.