Markets
Brent Fell 5.9% to $92.57, Its Lowest Close Since August
Brent settled down 5.85% at $92.57 a barrel on November 9, its lowest close since August. President Trump had said new attacks on Iran were unlikely.
Brent crude futures settled at $92.57 a barrel on Monday, November 9, down $5.75 or 5.85%, and US West Texas Intermediate settled at $86.85, down $3.98 or 4.38%. Selling continued after the settlement, with Brent down more than $7 on the day at one point, taking it to its lowest level since late August, Reuters reported. On Tuesday morning in Asia Brent was at $91.74 and WTI at $85.97, according to the Associated Press.
The trigger was a change of tone in Washington. President Donald Trump said on Sunday that he was highly unlikely to order fresh attacks on Iran while talks to end the conflict progressed, and he was due to meet Qatar's prime minister, the main mediator, on Monday. Several outlets, including OilPrice.com, reported that Qatar was carrying an Iranian proposal for an interim deal to reopen the Strait of Hormuz in exchange for an end to the US blockade and the release of $8 billion of Iranian funds held in Qatar; none of the parties confirmed its terms.
Nothing on the ground had calmed down. Both countries reported ships hit in or near the Strait of Hormuz, Saudi Arabia's East-West pipeline was struck in the Medina region, with a fire put out and no effect on operations, and the Houthis claimed an attack on Saudi Aramco's office in Riyadh. A senior Iranian security official said Tehran would not negotiate unless Washington met seven conditions from a June interim agreement. "This seems to have encouraged sellers on the prospects for peace even while the actual fighting is not slowing down," TACenergy wrote.
The supply numbers explain why sellers are willing to look past the incidents. OPEC's output rose by 1.38 million barrels a day in October to 22.87 million, according to a Reuters survey, and JPMorgan estimates the global surplus at about 1.4 million barrels a day. Morgan Stanley noted that Dated Brent, the physical benchmark, has slipped to a discount to the nearby futures contract, a sign that cargoes are easy to find.
Stocks took the drop as good news. United Airlines rose 6.78% and Delta 5.28%, and cheaper fuel helped the S&P 500 to its best day since April. One number points the other way for later: the US Strategic Petroleum Reserve has fallen to 279.5 million barrels, its lowest since October 1982, so a renewed spike would meet a smaller emergency buffer than at any point in four decades.