Gold Buys Fear, Energy Sells the War Premium Again

Today’s screen looked contradictory. Middle East risk returned, and gold reacted first, with August futures up $49.20 to $4,131.60/oz. Energy went the other way across the board. Brent Aug fell $2.03 to $75.99, WTI Aug fell $1.93 to $71.59, RBOB Aug lost 8.39 cents to $3.0195/gal and heating oil Aug lost 11.43 cents to $3.5432/gal. July ICE gasoil expiry tomorrow in NWE aggravated the front-end move, with July gasoil down $64.50 to $1,034.25/mt, Jul/Aug backwardation down roughly 22% to +$18.75/mt and Jul/Dec down to +$159.50/mt. Yet expiry is only part of the story. The broader energy complex sold off at the same time gold rallied. That means the market is pricing fear in precious metals, while stripping war premium from oil and products.

ICE Gasoil Jul/Aug

For biodiesel and RD, the damage came from energy falling faster than feedstock. Aug BOGO widened $40.25 to $527.21/mt, Sep widened $35.91 to $553.51/mt and Dec widened $23.16 to $638.30/mt. BOPO sat near $399/mt, while CBOT soybean oil weakened, with Aug at 69.92 cents/lb, down 1.31%, and Dec at 68.62 cents/lb, down 1.29%. Bean oil as a percentage of gasoil rose to 149.5% in July, 156.6% in September and 173.0% in December. This is the key point. Soybean oil did not rally, but gasoil fell so hard the relative feedstock burden still increased. The screen crushed the energy leg and left biofuel margins more exposed to policy support.

The bigger feedstock signal is the lack of panic in soybean oil structure. Aug/Dec soybean oil remains backwardated at only +1.30 cents/lb, down hard from the 4.00 cents/lb area seen in April, even with high D4 RINs, positive U.S. biodiesel margins and a larger 2026 RVO. Palm oil is also challenging the bullish feedstock story. Malaysia’s June palm output is expected up 8.9% month-on-month to 1.65 mmt, with inventories likely rising to the highest June level on record, while Perak mills face local congestion from too many fresh fruit bunches. Perak is only about 10% of Malaysian production, so the mill issue is local, but the message is global: palm supply is not behaving like a shortage market. We do not know whether the cushion in U.S. soybean oil is UCO, biodiesel product, RD product, or all three. The spread tells us the board is not pricing a domestic feedstock squeeze.

Soyoil Aug/Dec

The U.S. margin story still holds. The screen conventional biodiesel margin slipped 4.54 cents to $1.5076/gal, around $453/mt using 0.88 density. The RD margin slipped 3.64 cents to $1.0688/gal, around $376/mt using 0.75 density. A D4 input of $2.56 remains huge. Biodiesel at 1.5 D4 equals $3.84/gal, while RD at 1.6 D4 equals $4.10/gal before 45Z or LCFS. These values should attract molecules into the U.S., but the muted soybean oil inverse suggests the market sees more than domestic soybean oil as the answer. Feedstock imports, UCO imports, biodiesel imports and RD imports all reduce the urgency to chase nearby soybean oil on the board. 45Z timing also matters, with final clarity now pushed toward November, leaving producers to run 2026 with tax uncertainty still sitting over forward cover.

NWE stayed active despite the weaker energy screen. Month-to-date averages stand at $1,479.45/mt for RME, $1,442.28/mt for FAME 0, $1,577.50/mt for UCOME, $135.22/mt for UCOME/FAME and $1,320/mt for HVO class II premium. Today’s window showed FAME around $428/mt over gasoil, UCOME around $557.50/mt over gasoil and HVO class II around $1,205/mt over gasoil. Paper traded as well, with RME Aug/Sep 10kt at $445, UCOME 28kt across Aug, Aug/Sep, Q3, Q4 and Aug/Sep, plus UCOME/FAME Aug/Sep 4kt at $167. China gave soybeans another headline with 136kt to China and 120kt to unknown for 2026/27, but South America still anchors the global veg oil balance, with Paranaguá soybean oil basis still shown around -1700/-1850 for Aug and -1730/-1900 for Sep. The day’s message is volatility without direction: gold prices war risk, gasoil prices expiry pressure, RINs price U.S. scarcity, and global veg oil keeps saying supply is still available.