Oil Settles at Multi-Week Low as Markets Weigh Peace Talks and Supply Risks
Key Facts
Oil prices fell on November 3, with Brent crude settling at its lowest since October 7 and West Texas Intermediate at its lowest close since October 14, according to a Reuters report. Brent futures fell 1% to $103.60 a barrel, while WTI futures dropped 37 cents to $96.09. The report linked the move to the market weighing talks to end the wars in Ukraine and Iran against concerns that recent attacks in both conflicts could further disrupt supplies. Reuters said investors were monitoring the two parallel tracks, as peace talks could ease supply risks while the attacks keep those risks in place. The decline came in a session when the market was awaiting weekly U.S. inventory reports from the American Petroleum Institute and the Energy Information Administration.
On the Iran track, Qatar's foreign ministry spokesman said the United States and Iran remained committed to mediation efforts and were reviewing proposals aimed at narrowing their differences. But a senior Iranian official told Reuters that Washington and Tehran remained far from an agreement to end the war. The comments kept the negotiating track in the market's pricing, alongside concerns that attacks could disrupt supplies. The Reuters report said the market was balancing talks to end the two wars against disruption risks from recent attacks. The news therefore sent mixed signals about the prospect of geopolitical risks in the region easing.
On the Ukraine track, the Kremlin confirmed that Russia, Ukraine and the United States would hold trilateral peace talks in Abu Dhabi on November 10 and 11. The announced dates give the market a near-term milestone for tracking negotiations, as the Reuters report linked oil's move to the balance between the prospect of ending the war and the risk of attacks on supplies. The market's attention was not limited to the European track; U.S.-Iran talks and risks to Gulf supplies also remained among the factors cited in the report. Reuters said the market was also awaiting weekly U.S. inventory data, due in turn from the American Petroleum Institute and the Energy Information Administration. The Abu Dhabi talks are the most prominent dated diplomatic development in the days following the session.
The International Energy Agency's forecasts set the demand outlook against tight supply. In its September report, the agency forecast global oil demand would fall by 2.5 million barrels a day in 2026, then recover by 2.6 million barrels a day in 2027. In the same report, it forecast global supply would decline by 5.7 million barrels a day to an average of 100.7 million barrels a day in 2026, before production rebounded by 8 million barrels a day in 2027. These estimates indicate that the agency expects both demand and supply to contract in 2026, then recover in 2027. The figures provide an annual backdrop for the market, while the Reuters report linked the November 3 session's move to peace talks and supply concerns.
The International Energy Agency reported that observed global oil inventories fell by 95 million barrels in August, taking cumulative draws since February to 507 million barrels. In the same month, global oil production fell by 1.6 million barrels a day month on month to 100.1 million barrels a day, with more than 10 million barrels a day of Gulf production still offline. The data combine shrinking inventories with lower production, a context that helps explain the market's continued sensitivity to any development that could threaten supply flows. Over the longer term, Aramco is working to expand a crude oil pipeline that bypasses the Strait of Hormuz, Chief Executive Amin Nasser said. The work comes as the market focuses on supply risks and crude transport routes in the Gulf.
In the United States, Energy Information Administration data for the week ended October 30 showed commercial crude inventories, excluding the Strategic Petroleum Reserve, fell by 0.9 million barrels to 409.8 million barrels. The agency said the level was 4% below the five-year average, offering an indication of commercial inventories relative to the historical benchmark. Total commercial petroleum product inventories also fell by 8.2 million barrels in the same week. On product demand, total product supplied averaged 21.2 million barrels a day over the four weeks ended October 30, up 4.2% year over year. The figures show inventories falling alongside an increase in supplies recorded over four weeks, in data released after Tuesday's session.
The Energy Information Administration said U.S. refineries processed 16.7 million barrels a day in the week ended October 30, up 199,000 barrels a day from the previous week. The refinery utilization rate was 94.5%, according to the report issued on November 4. Before the government inventory data were released, Reuters had reported that the market was awaiting the American Petroleum Institute's report on Tuesday and the Energy Information Administration's report on Wednesday. On the Strategic Petroleum Reserve, the U.S. Department of Energy issued a request for proposals on September 29 to exchange up to 40 million barrels of crude, as part of the U.S. commitment to release 172 million barrels. These developments provide context on refinery activity, inventories and government supply, while the Abu Dhabi talks on November 10 and 11 remain the next political milestone cited by the sources.