Brent slips 0.25% to $103.34 as markets await U.S. election results
Key Facts
Brent crude futures fell 0.25% to $103.34 a barrel, while West Texas Intermediate fell 0.55% to $95.56 in early trading on Wednesday, November 4, Reuters reported. The move came as investors awaited the results of the U.S. midterm elections and official oil inventory data. Market sources cited by Reuters said U.S. crude inventories fell in the week ended October 30. The figures come as the market weighs inventory signals against supply risks linked to the conflict in the region. Brent and WTI had settled Tuesday at $103.60 and $96.76 a barrel, respectively, according to EL7 data.
Crude inventories fell by 5.27 million barrels in the week ended October 30, while the average forecast of 8 analysts polled by Reuters pointed to an increase of about 880,000 barrels. That put the inventory reading in the opposite direction from analysts' expectations, according to sources that cited data from the American Petroleum Institute. Early price action was nevertheless lower, as the crude reading did not prevent prices from falling at the start of Wednesday's session. Inventory figures need to be considered alongside other components of the petroleum products data. Gasoline inventories rose by 1.43 million barrels from the previous week, while distillate inventories fell by 1.19 million barrels.
Haitong Futures said in a note that the data "generally support oil prices," noting that diesel inventories remained tight while gasoline inventories rose more than expected. The reading combines two contrasting factors in the products market: a decline in distillates and an increase in gasoline. In the previous session, Brent lost more than 1% and hit its lowest level in about 4 weeks, Reuters reported. Traders were then balancing talks to end the wars in Ukraine and Iran against supply disruption risks. That leaves Wednesday's session following an earlier decline, with inventory signals still diverging between crude and products.
Geopolitical developments remained a factor in the market's outlook. Reuters said investors were watching for any progress in talks to end the U.S.-Israeli war with Iran, while Qatar stepped up mediation efforts to avert an escalation in attacks after the U.S. election. The agency quoted a senior Iranian official as saying on Tuesday that Iran and the United States "remain far from an agreement" to end the war. The Associated Press also reported that Iran had offered to reopen the Strait of Hormuz and resume nuclear talks in exchange for the United States lifting its naval blockade of Iranian ports, lifting sanctions on oil sales, and a ceasefire that includes Lebanon. The agency described the conflict as a war that had lasted more than 8 months as of November 3.
Politically, the Associated Press reported that Democrats won the Senate and were on the verge of taking control of the House of Representatives in Tuesday's midterm elections. Markets were awaiting the election results in early trading, Reuters reported, but oil prices were also moving in step with attention to inventories and Iran talks. The available facts did not provide a basis for directly linking the election outcome to the direction of crude prices. In its market coverage, the Associated Press said the S&P 500 had delivered a positive return in every instance during the 6 months after midterm elections since 1970, citing an analyst at Edward Jones. That historical observation concerns U.S. equities, while near-term oil drivers continued to include inventories and supply risks.
The U.S. Energy Information Administration was scheduled to release its official data on Wednesday at 10:30 a.m. Eastern time, Reuters reported, providing the government reading on inventories for the week. The agency's schedule shows that the report for the week ended October 30 was postponed to November 12 because of the Veterans Day holiday. The schedule also lists November 12 at 12:00 p.m. Eastern time as the alternative release date for the report for the week ended November 6. The schedule therefore includes a postponed date for the report for the week ended October 30, alongside the alternative date for the following report. Tracking these dates remains important for a market that has already compared inventory estimates from market sources while awaiting official data.