Oil prices finished strong last week, with ICE Brent settling almost 2.4% higher on Friday to close above $113\/bbl. It was also the Dec-26 contract expiry; it settled at $117.64\/bbl on its last trading day. Vessels have faced a growing number of attacks in recent weeks. Yet this coincides with signs that more traffic is flowing through the Strait of Hormuz. Fears remain high over the potential for fresh US and Israeli strikes on Iran following the US midterms. Reports say that President Trump wants to give diplomacy a chance are weighing on prices in early morning trading today. Iranian negotiators have been in Doha over the weekend, holding talks with Qatari mediators. It remains to be seen whether this will lead to anything.<\/p>\n
The price action in oil in recent weeks reflects a market increasingly bracing for the potential for more hostilities between the US and Iran. If the midterms pass with neither strikes nor a deal, the key question is whether the market continues to price in a substantial geopolitical risk premium or whether that premium gradually begins to unwind. Given that many of the key developments in this conflict have unfolded over weekends, the market may have to hold its breath until the end of the week.<\/p>\n
Meanwhile, in Russia, the brief respite that refiners received from Ukraine appears to have ended. Attacks on Russian refiners resumed towards the end of last week. The roughly 2-week pause had seen the ICE gasoil crack fall below $70\/bbl and trade to its lowest level since early October. Further attacks would likely provide a floor to the crack, with strikes casting doubt over how much diesel Russia will export. Russia\u2019s deputy prime minister said that Russia plans to export 2.15m tonnes of diesel in November, up from a little more than 500kt in October.<\/p>\n
OPEC+ met over the weekend to discuss output policy for December, with no surprises. Members decided to keep output targets unchanged for the month. Given disruptions in the Persian Gulf, most members are producing well below their production target.<\/p>\n
The latest positioning data shows that speculators increased their net long in ICE Brent by 3,576 lots over the last reporting week to 245,457 lots as of last Tuesday. Fresh longs drove the move. Meanwhile, the net speculative long is still some distance away from the year-to-date high of around 430k lots seen in March. This suggests that with the right catalyst, speculators could add to this position. A strong catalyst would be needed, though, given that from a risk-reward perspective it may not make sense to take too much risk on the long side at current price levels.<\/p>\n
European gas prices saw significant strength at the end of last week, with TTF settling more than 6% higher on Friday, near EUR104\/MWh. Prices eased slightly in early morning trading today. Weather forecasts for NW Europe show colder-than-usual weather this week, leading to potentially large storage draws. EU gas storage peaked at just under 75% last Tuesday and has been edging lower since, suggesting the heating season is now underway. With a tight balance through the winter, the market is likely to remain extremely volatile, and weather will prove to be even more important than usual.<\/p>\n","protected":false},"excerpt":{"rendered":"Oil prices finished strong last week, with ICE Brent settling almost 2.4% higher on Friday to close above…\n","protected":false},"author":2,"featured_media":902864,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[37],"tags":[28,112],"class_list":["post-902863","post","type-post","status-publish","format-standard","has-post-thumbnail","category-markets","tag-business","tag-markets"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/902863","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=902863"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/902863\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/902864"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=902863"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=902863"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=902863"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}