Brent’s price inches lower on easing supply concerns

The front-month ICE Brent contract inched $0.05/bbl lower on the day, to trade at $71.74/bbl at 09.00 GMT.

PHOTO: Oil barrels. Getty Images

Upward pressure:

Oil prices gained some upward momentum after the American Petroleum Institute (API) reported an unexpected decline of 573,000 bbls in US crude stocks in the week that ended 25 October.

A drop in US crude stocks indicates growth in oil demand, which can put upward pressure on Brent’s price.

Additionally, oil market traders and analysts are bracing for the US elections on 5 November. A change in the US government could impact economic policies in the world's top oil consuming nation, which could have several implications for oil.

However, according to SPI Asset Management’s managing partner Stephen Innes, “the US labour market is stabilising, potentially giving the Fed more confidence to proceed with rate cuts—even as election-related uncertainties loom.”

Lower interest rates in the US can further boost demand growth for dollar-denominated commodities like oil as it makes the greenback weaker against other currencies.

Downward pressure:

Brent’s price moved lower as Israel's latest attack on Iran was not directed toward the country's oil facilities.

Israel launched over 100 missiles into Iran on Saturday, but none were directed toward the latter’s energy or nuclear facilities. As a result, supply-related concerns in the global oil market have eased, capping Brent’s price gains.

Oil moved lower due to “a deflation of Mideast risk premium on easing Israel-Iran tensions,” VANDA Insights’ founder and analyst Vandana Hari said.

Meanwhile, Israeli Prime Minister Benjamin Netanyahu revealed plans to hold a diplomatic meeting this week to resolve the conflict in Lebanon, Reuters reported. This news has added some downward pressure on Brent’s price.

“The prospect of a ceasefire in Gaza and the apparent de-escalation of tensions across the broader Middle East has seen the market almost completely remove the geopolitical risk premium it had priced into the [oil] market last week,” ANZ Bank’s senior commodity strategist Daniel Hynes said.

By Aparupa Mazumder

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