Brent Crude Falls 7.4% to $105.03 as U.S. Stocks Rise
Key Facts
U.S. stocks rose and Brent crude fell in Monday’s session on November 2, with the Dow Jones Industrial Average up 539 points, or 1%, by 11:45 a.m. Eastern time, while Brent fell 7.4% to $105.03 a barrel. The S&P 500 rose 0.6% and the Nasdaq gained 0.7% at the same time. The gains in stocks came as markets partially recovered from a selloff the previous week, led by technology and artificial intelligence shares. Oil, meanwhile, remained highly volatile amid uncertainty over when the global energy industry would return to normal amid the war with Iran. The moves reflected a contrast between temporary relief in equity markets and a sharp drop in oil, without resolving the outlook for supplies or negotiations.
The S&P 500 was 2.5% below its record high, putting its daily gains in the context of a recovery that had not fully erased last week’s losses. Stocks came under pressure that week, led by technology and artificial intelligence companies, before rising at the start of the new week. Shares of companies that benefit from lower fuel costs rose during Monday’s session: United Airlines gained 6.5%, Southwest Airlines rose 4.4% and Carnival climbed 5.5%. Alphabet rose 1.3%, recovering some of a decline of more than 12% on Thursday, its worst drop on record, according to Associated Press coverage. Nvidia gained 1.1% after falling 4.2% on Friday. The moves showed some stocks recovering from recent declines as oil fell.
In manufacturing, the Institute for Supply Management’s October report showed its prices index falling 2.7 percentage points to 75.2%, though it still pointed to broad increases in raw material costs. Axios reported that U.S. factory output continued to expand during the month, driven by strong demand for equipment related to artificial intelligence. The report added that this demand was also straining supply chains and pushing prices higher. The drop in the prices index thus coincided with broad-based cost pressures, while factory activity remained supported by demand for AI equipment. These indicators provide an economic backdrop to market moves as companies and investors watch the impact of AI spending and input costs.
Oil’s decline followed a rise at the end of October to its highest level in six months, amid concerns that the Middle East conflict could escalate after the U.S. midterm elections. Reuters quoted UBS analyst Giovanni Staunovo as saying that the oil market “remains extremely sensitive to every headline from the Middle East.” He added that fears of an imminent escalation lifted prices the previous week, before they fell sharply as diplomatic talks between the United States and Iran continued. Reuters linked the decline to hopes of easing supply disruptions after Iranian-Qatari talks, and noted that the absence of a tangible military escalation over the weekend helped temporarily calm prices. But Brent remained at $105.03 a barrel in the trading cited, amid continued uncertainty over a return to normal supplies.
On the supply side, Sultan Al Jaber, chief executive of Abu Dhabi National Oil Company, said the world’s inventories had been depleted by about 1 billion barrels since the war disrupted shipping through the Strait of Hormuz. Goldman Sachs raised its price forecasts because of supply risks, citing the possibility that Brent could reach $140 in 2027 if Gulf output remained 3.5 million barrels a day below the 2025 average. The warning about inventories coincided with falling prices in Monday’s session, underscoring the market’s sensitivity to developments in the war and talks. Iranian negotiators left talks in Doha on Sunday, but a person familiar with the matter said their departure was not due to difficulties in the negotiations. The person said a draft proposal had been circulated for feedback and that a follow-up meeting was under discussion.
Iran’s publicly stated proposals included fully reopening the Strait of Hormuz to shipping within two days if Washington met conditions including lifting its blockade of Iranian ports. A U.S. official said earlier that Washington and Tehran were “very close” to an agreement to de-escalate, while Axios reported that Qatari mediators were seeking to resume negotiations before a possible return to war after the midterm elections. The Iranian conditions, according to the report, include lifting the blockade, releasing frozen funds and allowing oil sales. Iranian officials, meanwhile, warned of a response to any attack, and an Emirati presidential adviser said Washington’s and Tehran’s positions were far apart. China announced that it would send a special envoy to Iran, Oman and Saudi Arabia in early to mid-November.
The following day, November 3, is the date of the American Petroleum Institute’s weekly oil inventories report, coinciding with the U.S. midterm elections. The report is due as the market tracks war-related supply disruptions and the course of talks, while Monday’s session showed prices remained sensitive to news from the region. The Doha negotiations remain in focus after a draft proposal was circulated and a follow-up meeting discussed, while Iran’s publicly announced proposal sets out conditions tied to the blockade and reopening the Strait of Hormuz. The Chinese envoy’s expected mission in early to mid-November adds another diplomatic milestone. The Dow Jones Industrial Average closed at 52338.97 points on November 2, compared with a close of 51770.31 points on October 30.