Futures Wrap: Oil Spikes on Strait of Hormuz Attacks, S&P 500 Pulls Back from Record Highs

Monday opened with oil dominating the tape. WTI crude ripped above $108 intraday before settling around $106.67, up 1.19% on the session. The catalyst: weekend attacks on Persian Gulf energy infrastructure, including a strike on a UAE nuclear facility, coupled with the Strait of Hormuz remaining functionally closed to tanker traffic.

Equities gave back some of Friday's gains. The ES (S&P 500 E-Mini) dropped 27 points to 7,405, a 0.37% decline from the record close. Tech led the selling, with the NQ (Nasdaq 100 E-Mini) sliding 0.76% to 29,034 as rising bond yields pressured growth names.

The energy complex remains the story. For futures traders, crude volatility presents both opportunity and risk. Today's price action shows why position sizing matters when geopolitical headlines can move CL 6 points in a session.

Here's where the major futures contracts settled on Monday, May 18:

• ES (S&P 500 E-Mini): 7,405.00 (-0.37%)
• NQ (Nasdaq 100 E-Mini): 29,034.25 (-0.76%)
• YM (Dow E-Mini): 49,615 (-0.03%)
• CL (Crude Oil WTI): $106.67 (+1.19%)
• GC (Gold): $4,547.90 (-0.31%)
• SI (Silver): $76.91 (-0.49%)

Crude was the clear winner. Index futures drifted lower on profit-taking after Friday's record highs. Gold and silver pulled back as rising yields undercut the safe-haven trade.

Crude Oil: Strait of Hormuz Headlines Drive 6-Point Range

CL futures gapped higher at the Sunday open and kept running. The weekend attacks on Gulf energy infrastructure, combined with ongoing Strait of Hormuz closure concerns, pushed WTI from an open around $101.64 to a session high above $108 before settling near $106.67.

The Trump administration is reportedly negotiating a temporary waiver of Iranian oil sanctions as part of ongoing talks. Iranian media reported the proposal Sunday, which briefly capped the rally. But with the Strait functionally closed to tanker traffic and last week's Trump-Xi summit producing no breakthrough on reopening the waterway, supply concerns remain elevated.

Adding to the uncertainty: the administration let a waiver permitting Russian crude sales to India expire despite New Delhi's appeal for an extension. For crude traders, the message is clear: geopolitical risk premium is here to stay, at least until the Hormuz situation stabilizes.

Equity Indexes: Tech Leads the Pullback

After Friday's record close on the ES, Monday brought the inevitable breather. The S&P 500 E-Mini shed 27 points, a modest 0.37% decline, while the Nasdaq 100 E-Mini fell harder at 0.76%. The Dow held up best, essentially flat with a 2-point loss.

Rising bond yields drove the divergence. As crude surged, inflation expectations ticked higher, pushing Treasury yields up across the curve. Growth stocks, which are more sensitive to rate expectations, bore the brunt of the selling. Value and energy names outperformed, but not enough to keep the indexes green.

This week brings earnings from several major AI companies. If those reports show continued strength, tech may find a bid despite the rate pressure. But for now, the NQ is taking a back seat to energy.

Metals: Gold and Silver Give Back Weekend Gains

Gold futures dropped to a 1.5-month low at $4,547.90, down 0.31% on the session. Silver followed, sliding 0.49% to $76.91. The selloff may seem counterintuitive given the geopolitical backdrop, but rising Treasury yields are undercutting the safe-haven trade.

With energy prices driving inflation expectations higher, bond markets from Tokyo to New York extended losses. When yields rise, non-yielding assets like gold become less attractive. Silver rebounded briefly on Iran deal hopes but couldn't hold the gains.

The metals trade remains headline-driven. A surprise breakthrough on Iran could spark a quick rally. But absent that, the yield pressure is likely to keep a lid on prices near term.

Tuesday brings several catalysts that could set the tone for the rest of the week:

• Strait of Hormuz updates: Any progress (or deterioration) on reopening the waterway will move crude immediately. The $100 to $110 range remains the battleground.
• Iran sanction waiver details: If confirmed, a temporary waiver could bring Iranian barrels back online and pressure prices. Watch for official statements from both sides.
• AI sector earnings: Several major AI companies report this week. Strong results could offset yield pressure on the NQ. Weak numbers could accelerate the tech rotation.
• Treasury auction demand: With yields rising, watch for any signs of weak demand at upcoming auctions. Poor bid-to-cover ratios could push yields higher and pressure equities further.

The ES is holding above the 7,400 level, which served as resistance in late April before the breakout. If that level holds as support, the pullback may be nothing more than healthy consolidation. A break below opens the door to 7,350.

Days like today are why risk management separates funded traders from blown accounts.

Crude moving $6+ in a session creates opportunity, but it also creates risk. A single contract of CL with $6 of movement is $6,000 of P&L. Scale that up without proper position sizing and a wrong-way trade can end your evaluation.

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Oil is running the show. Until the Strait of Hormuz reopens or tensions cool, expect crude volatility to drive cross-asset moves. Trade accordingly.

Good trading,

Robert Shaw

Data sources: CME Group, Barchart