Oil fluctuates after US elections: market awaits next move on Iran

Oil prices fluctuated at the start of trading in Asia today, searching for direction amid uncertainty over the next developments in the conflict between the United States and Iran. Investors are waiting to see Washington’s next steps, as the political situation was complicated by a strong showing by Democrats in the US congressional elections, in which President Donald Trump’s Republicans lost their majority in both chambers. In the previous trading session, Brent crude closed at its lowest level in almost four weeks.

At around 7:40 CET, the price of North Sea Brent crude was up slightly, by 0,4 percent, at USD 103,96 per barrel. US light crude WTI was up 0,2 percent at the same time, trading at 96,29 dollars per barrel.

US forces carried out what a US official described as “defensive strikes” this week, targeting air defence systems. Another US official said the attacks were limited in scope and did not signal a return to large-scale combat operations. Trump also told the Financial Times in an interview that the United States did not plan to attack Iran in the near future. Qatar has meanwhile stepped up its mediation efforts to prevent further escalation of the conflict. However, according to a senior Iranian official, Tehran and Washington remain far from an agreement to end the war.

Analysts warn that the US president’s conflicting statements about the next course of action toward Iran make it difficult to predict how prices will develop. Although the risk of oil supply disruptions through the Strait of Hormuz remains, some investors may be taking profits after the sharp rise in October and scaling back speculative bets on further oil price increases, according to Priyanka Sachdeva, an analyst at Phillip Nova.

The market is also being supported by data on US oil inventories. They fell by 5,27 million barrels in the week to October 30, according to figures from the American Petroleum Institute (API), cited by market sources. Analysts surveyed by Reuters, by contrast, had expected inventories to rise by an average of 880.000 barrels. Gasoline inventories rose by 1,43 million barrels, while distillate inventories, which include diesel, fell by 1,19 million barrels.

Overall, the data support oil prices, according to analysts at Haitong Futures. Diesel inventories remain low, while gasoline inventories rose more than expected. Investors are now waiting for official figures from the US Energy Information Administration (EIA), due to be released this afternoon.

Oil prices in dollars per barrel (about 159 litres)