Brent rises 0.8% to $104.42 in Nov. 4 session amid Hormuz risks
Key Facts
Brent crude futures rose 82 cents, or 0.8%, to $104.42 a barrel at 05:10 GMT on Wednesday, Nov. 4, while West Texas Intermediate rose 50 cents, or 0.5%, to $96.59, reversing earlier losses. Reuters described the move in a report published by The Daily Star, during a session in which energy markets were tracking the U.S. election results and developments related to Iran. Brent had closed in the previous session at its lowest level in about four weeks, as traders weighed talks to end the wars in Ukraine and Iran. The gains came as risks of supply disruptions around the Strait of Hormuz remained. A decline in U.S. crude inventories also provided fundamental support for prices, according to Reuters.
The U.S. Energy Information Administration’s weekly report showed that commercial crude inventories, excluding the Strategic Petroleum Reserve, fell 0.9 million barrels to 409.8 million barrels in the week ended Oct. 30. That was 4% below the five-year average, according to the official report. Gasoline inventories fell 0.2 million barrels, leaving them 2% below the five-year average. Distillate inventories fell 3.6 million barrels and were 13% below the five-year average. The figures are important for assessing the U.S. supply balance, as concerns persist about disruptions to energy flows in the region.
On the demand side, total product supplied averaged 21.2 million barrels per day over the four weeks ended Oct. 30, up 4.2% from the same period a year earlier, according to the EIA. U.S. refineries processed 16.7 million barrels per day during the week, up 199,000 barrels per day from the previous week, while operating at 94.5% of capacity. Inventory data showed declines in crude and fuel, while average product supplied to the market rose year over year. Refinery activity adds context to the inventory movement, reflecting the volume of crude converted into products during the week. Reuters cited the unexpected draw in U.S. crude inventories as a source of fundamental support.
Developments in the war and around the Strait of Hormuz remained part of risk pricing, with a market analyst at Phillip Nova saying conflicting signals from the U.S. president had made it difficult to form a conviction about the market’s direction. She added that military strikes continued alongside statements playing down the likelihood of escalation, leaving traders to contend with mixed signals. The United States had carried out what it called defensive strikes on Qeshm Island, targeting surface-to-air missiles used against U.S. assets, according to a U.S. official cited by Reuters. Another official said the strikes appeared limited and did not signal a return to major combat operations. On the election, the Associated Press said concerns about war and rising prices for fuel and other goods helped Democrats win control of both chambers of Congress, while observers tracked the impact of the results on the war with Iran.
In a later update dated Nov. 6, the Associated Press said Iran was reviewing Qatari proposals to address disputes with the United States over its nuclear program, but was not ready to negotiate its nuclear activities before its basic ceasefire conditions were met. A proposal discussed by mediators and Iran included confidence-building measures over two days, including the lifting of the U.S. blockade and access for International Atomic Energy Agency inspectors, followed by the reopening of the Strait of Hormuz under a modified arrangement. In trading after the Nov. 4 session, EL7 data showed Brent closing at $98.32 a barrel on Nov. 6, compared with $94.62 on Nov. 4; WTI closed at $90.83, compared with $88.12. These were separate subsequent closes from the prices recorded at 05:10 GMT during Wednesday’s session. The next EIA weekly report is scheduled for Thursday, Nov. 12, at 12:00 p.m. Eastern time, because the federal government is closed on Nov. 11.