Oil gains 4% in five days over Middle East conflict ahead of US presidential elections; Brent at $76/bbl
- Brent settled four per cent up on the week, while WTI settled 3.7 per cent higher in the last five sessions amid the Middle East conflict ahead of the US presidential elections.
International crude oil prices settled higher in the previous session, gaining four per cent in the last five days as investors are taking stock of the ongoing geopolitical conflict in the Middle East, which is leading to crude supply concerns, ahead of the high-stakes US presidential elections next month.
Brent crude futures settled $1.67, or 2.25 per cent higher, at $76.05 a barrel. US West Texas Intermediate (WTI) crude settled up $1.59, or 2.27 per cent, to $71.78. Brent settled four per cent up on the week, while WTI settled 3.7 per cent higher in the last five sessions. Back home, crude oil futures settled 2.18 per cent higher at ₹6,040 per barrel on the multi-commodity exchange (MCX).
Brent, WTI up 4% on the week: What's driving crude oil?
-Analysts said the oil market is bouncing around in a holding pattern till the conclusion of the Israel-Iran war and the US presidential elections. According to analysts, the US election is creating uncertainty in a lot of markets, and people are pulling their horns, not ready to make big commitments because of the potential for spikes, volatility and uncertainty
-Investors globally are piling into the US dollar and betting on rising volatility ahead of the next crucial two weeks, which will lead up to the November 5 election in the US, an election in Japan, three major central banks deciding on interest rates, and the UK government presenting its new budget.
Also Read: OPEC trims 2024 global oil demand forecast to 1.93 million bpd on bulk of China downgrade
-Both benchmarks have fluctuated this week, rising on Monday and Tuesday before falling on Wednesday and Thursday, largely due to heightened or reduced Middle East risk expectations. Analysts said geopolitics is the leading force today, and the market is waiting to see what direction the US elections may take in the commodity.
-An Israeli strike killed three journalists in south Lebanon on Friday, Lebanon's health ministry said, and the UN refugee agency warned that Israeli airstrikes on a border crossing with Syria were hindering refugees trying to flee the war.
-US Secretary of State Antony Blinken said there was a sense of urgency in getting to a diplomatic resolution to end the conflict in Lebanon between Israel and Iran-aligned Hezbollah while calling for the protection of civilians. US and Israeli officials are set to restart talks for a ceasefire and the release of hostages in Gaza in the coming days.
-Investors continue to await Israel's response to an Iranian missile attack on October 1. A response could involve strikes on Tehran's oil infrastructure, though media reports said Israel would strike military rather than nuclear or oil targets. Traders seek more clarity on China's stimulus policies, though analysts do not expect such measures to boost oil demand significantly.
Where are prices headed?
Goldman Sachs on Thursday left its oil price forecasts unchanged at between $70 and $85 a barrel for Brent in 2025, expecting the impact from any Chinese stimulus to be modest relative to bigger drivers such as Middle East oil supply.
In a note on Friday, Bank of America forecasts Brent crude to average $75 a barrel in 2025 without any rollback of the production cuts by the Organisation of Petroleum Exporting Countries (OPEC) into next year.
Also Read: Goldman Sachs turns cautious on Indian stocks, downgrades to ’Neutral’ on growth concerns
“For MCX, the support is seen at $70.90-$70.00, with the resistance at $72.10-$72.70. In INR terms, crude oil has support at ₹5,900- ₹5,840 and resistance at ₹6,070- ₹6,165,” said Rahul Kalantri, VP Commodities, Mehta Equities Ltd.
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