Solid Gold Berjangka – Global oil prices weakened for the fourth consecutive day in trading on Thursday (Nov 5). Brent crude traded at around US$94.16 per barrel, while West Texas Intermediate (WTI) hovered near US$87.92 per barrel, as the market assessed a diminishing risk of an escalating conflict between the US-Israel and Iran.
Downward pressure on oil prices emerged following the defeat of President Donald Trump’s Republican Party in the US Congressional elections. A Democrat-controlled Congress is expected to limit Trump’s latitude in taking military action, thereby increasing the likelihood of resolving conflicts through diplomatic channels.
Expectations of a de-escalation also raise the prospect of a recovery in oil supplies from the Middle East. Oil shipments through the Strait of Hormuz are reportedly nearing pre-conflict levels, although shipping costs remain relatively high.
JPMorgan estimates that the global oil market returned to a surplus of approximately 1.1 million barrels per day in September, widening to 1.4 million barrels per day in October. The recovery in supply from the Gulf region is one of the factors contributing to the downward pressure on oil prices.
Nevertheless, geopolitical uncertainty remains high. Citi notes that the White House retains significant authority over foreign policy, meaning the risk of an intensified conflict with Iran has not entirely vanished. The Eurasia Group also estimates that the probability of a new US strike against Iran remains around 60%.
On the other hand, commercial oil inventories in major consuming nations remain at low levels. Data from the EIA shows that US stockpiles of crude oil, gasoline, and distillates declined last week, while demand reached its highest level in a year. These conditions could potentially limit any further decline in oil prices. (srh)