DTN Oil Update
Oil Up 3% or More; Iran Uncertainty Reignites Supply Fears
SECAUCUS, N.J. (DTN) -- Crude futures settled up about 3% or more on Thursday, recovering nearly a quarter of Wednesday's loss, as Middle East supplies appeared vulnerable despite potential changes to the trajectory of the Iran war from this week's U.S. midterm elections.
NYMEX WTI crude for December delivery rose $2.40, or 2.72%, to settle at $90.52/bbl. WTI hit a four-week low of $87.13 on Wednesday, Nov. 4, falling 8% for its largest one-day decline since April.
ICE Brent for January delivery climbed $3.67, or 3.88%, to close at $98.29/bbl, after also losing around 8% in the prior session.
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Downstream, ultra-low sulfur diesel (ULSD) for December delivery rebounded $0.1464, or 3.48%, to finish at $4.3519/gallon.
RBOB for December delivery advanced by $0.0348, or 1.28%, to end at $2.7634/gallon.
The U.S. Dollar Index gained 0.005 points to 101.425 against a basket of foreign currencies.
Wednesday's selloff across energy futures came as control of Congress flipped to Democrats in Tuesday's, Nov. 3, midterm elections. When Democratic lawmakers take charge in January, they plan to invoke the War Powers Resolution to constrain U.S. President Donald Trump's war against Iran.
Notwithstanding the Democrats' plans, some market analysis suggested that upside risks to crude prices had barely changed.
Eurasia Group raised the likelihood of a prolonged Iran war to 30% from 15%, citing Tehran's firm negotiating stance and Washington's reluctance to accept terms perceived as a defeat. In such circumstances, any escalation in hostilities could drive Brent back toward the $110-$125 bbl range, it said.
Citigroup cautioned that the White House may lean heavily on executive foreign policy powers, increasing the potential for renewed escalation with Iran.
Ongoing maritime threats in the Persian Gulf continue to keep a floor under prices, with maritime security agencies reporting at least five vessel attacks since Sunday -- maintaining a near-record pace of disruptions in key shipping lanes.
On the diplomatic front, Iran's foreign ministry confirmed discussions with Saudi and Qatari officials regarding regional stability, though market analysts note Tehran's core stance in U.S. negotiations remains unchanged.
JPMorgan reported that the uptick in Gulf oil shipments over the past two months had pushed global supply back into a surplus of 1.1 million bpd in September and 1.4 million bpd in October.
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