Brent Settles at $103.60 After Tuesday’s Drop, Rebounds in Wednesday Trading
Key Facts
Brent futures settled Tuesday, November 3, at $103.60 a barrel, down 1% or $1.17, their lowest settlement since October 7, Reuters reported. In early Wednesday trading, the price fell 26 cents, or 0.25%, to $103.34 by 0157 GMT. The market later reversed course: Brent rose 76 cents, or 0.7%, to $104.36 at 0730 GMT, erasing earlier losses in a volatile session. The shift came as investors tracked the U.S. midterm election results and what they might mean for talks aimed at ending the war. Wednesday’s move thus differed from Tuesday’s close, with crude continuing to swing as mixed signals emerged on supply and escalation. The election and the talks were among the factors the market monitored during trading, without settling the direction of prices.
On the supply side, U.S. crude inventories fell by 5.27 million barrels in the week ended October 30, according to American Petroleum Institute data cited by Reuters from market sources. The average forecast of 8 analysts polled by Reuters had pointed to an increase of about 880,000 barrels, making the draw a surprise compared with expectations. Among refined products, gasoline inventories rose by 1.43 million barrels, while distillate inventories fell by 1.19 million barrels from the previous week. Haitong Futures said diesel inventories remained limited and gasoline inventories increased by more than expected. The company described the inventory data as supportive of oil prices, despite mixed moves in crude and fuel. An analyst at Phillip Nova said the unexpected draw in U.S. crude inventories provided fundamental support to the market.
On the diplomatic front, Qatar’s foreign ministry said a delegation visited Tehran on Monday and held a meeting lasting about three hours to exchange proposals, then returned to Doha that evening. The ministry added that mediators were continuing to exchange proposals and that both sides were reviewing the ideas submitted. The spokesman said continued negotiations offered a glimmer of hope for reaching an agreement, but said it was not possible at present to speak of a specific breakthrough. Reuters reported that Qatar had stepped up mediation efforts to avert an escalation in attacks after the U.S. election. A senior Iranian official told the agency that Tehran and Washington remained far from an agreement to end the war. Reuters quoted an analyst as saying that conflicting U.S. signals, with strikes continuing alongside statements playing down the likelihood of escalation, had made it difficult for traders to form a clear view of the market’s direction.
Risks linked to the strait heightened the market’s sensitivity to military developments. The Associated Press reported that the United States carried out what it described as a limited strike on Iranian targets in the Strait of Hormuz ahead of Tuesday’s election. Reuters quoted a U.S. official as saying strikes on Qeshm Island targeted surface-to-air missiles used against U.S. assets in the strait, while another official said they appeared limited and did not indicate a return to major combat operations. In contrast, Reuters quoted President Donald Trump as telling the Financial Times that the United States was not planning to strike Iran in the near future. The Associated Press reported that Iran had offered to reopen the strait and resume nuclear talks if Washington lifted its naval blockade of Iranian ports, exempted Iranian oil sales from sanctions, and committed to a ceasefire that included Lebanon. The analyst said the risk of supply disruptions around the Strait of Hormuz had not disappeared, and also considered profit-taking and a reduction in speculative long positions justified after October’s sharp rise.
In a parallel political development, the Associated Press reported that Democrats won majorities in both the Senate and the House of Representatives in the midterm elections. The agency quoted U.S. Vice President JD Vance as saying on Monday that he and President Trump were optimistic about the chances of reaching a negotiated settlement. Those comments remained part of a mixed picture, alongside the U.S. strike and Iran’s statement that an agreement was still far off. The next government inventory data cover the week ended November 6. According to the U.S. Energy Information Administration’s schedule, the report will be released Thursday, November 12, at 12:00 noon Eastern Time, because of the Veterans Day holiday. That data will be the latest official inventory reading on the schedule cited.