Brent crude is hovering near $96 as a looming surplus and weaker demand pull prices lower, while shipping attacks and a tougher tone from Washington add a risk premium. Bond yields keep climbing even as oil falls.
Brent crude is hovering near $96 as two opposing forces cancel each other out. A looming surplus and weaker demand push prices down, while shipping attacks add a risk premium.
Surplus and weaker demand weigh on prices
The benchmark trades at $95.98 (+0.17%) as of 3:11 PM EST on Nov 13. It is down 2.38% on the week and 9.19% over a month, but still up 57.71% year to date.
The IEA says the market will be in surplus this quarter for the first time since the war began. The agency also flagged a significant hit to consumption this year and only modest transport fuel demand growth next year, partly because of high prices.
Meanwhile, US inventories of crude and products rose last week, and refinery runs hit a seasonal record. Speculation that the Democratic midterm win would hasten an end to the war also pushed Brent lower from its late-October six-month high.
Shipping attacks and cooling talks add risk
On the other side, Verisk Maplecroft counted 36 confirmed attacks on commercial ships in October, the most in a month since the war began. More ships were hit this week.
Diplomacy also cooled. Trump told Vice President Vance to focus on domestic issues, which undercut back-channel talks with Iran. Separately, Ukraine's attacks on Russian plants could squeeze global fuel supplies.
Yields rise despite cheaper oil
Falling oil has not delivered the relief bond markets hoped for. The US 10-year yield is 5.157% (+1.08%), even though oil is down about 9% in a month. That suggests inflation worries now come from core prices, not only energy, in line with this week's hot CPI report.
For Brent, a rise above $100 would signal the risk premium is winning, while a fall below $90 would suggest the surplus narrative is taking hold.
Source: Investing.com
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