Oil prices climbed in a volatile Wednesday session as investors awaited Washington’s next move in the war with Iran, following a midterm election rout where Democrats captured control of the US Congress from President Donald Trump’s Republicans.
Crude Futures Rise After Surprise US Inventory Drawdown
Brent futures rose 82 cents, or 0.8%, to $104.42 a barrel at 0510 GMT. US West Texas Intermediate crude futures gained 50 cents, or 0.5%, to reach $96.59, reversing earlier declines. The previous session saw Brent settle at its lowest level in nearly four weeks as traders weighed talks aimed at ending the wars in Ukraine and Iran.
Fundamental support also came from an unexpected drawdown in US crude inventories, which fell by 5.27 million barrels in the week ended October 30, according to data from the American Petroleum Institute cited by market sources. Eight analysts polled by Reuters had expected an average rise of about 880,000 barrels. Meanwhile, gasoline stocks rose by 1.43 million barrels, and distillate inventories dropped by 1.19 million barrels.
Haitong Futures noted in a Wednesday report that diesel inventories remain tight while gasoline stocks rose more than expected, making the data broadly supportive of oil prices. Official data from the US Energy Information Administration was scheduled for release at 10:30 a.m. EST on Wednesday.
Democrats Secure Congressional Majorities During US Midterms
Vote counting during the US midterm elections confirmed Democrats snaring majorities in both houses of Congress for the remainder of Trump’s second term. Amid this political shift, market watchers grappled with mixed signals from the White House regarding the ongoing conflict in the Middle East.
Sachdeva added that profit-taking and a reduction in speculative long positions were justified following October’s sharp rally, though underlying supply disruption risks around the Strait of Hormuz remained present.
On Tuesday, a US official stated that the United States carried out defensive strikes on Iran’s Qeshm island targeting surface-to-air missiles used against American assets. Another official noted that the strikes appeared limited and did not signal a return to major combat operations. Speaking to the Financial Times on Tuesday, US President Donald Trump stated that Washington currently has no plans for imminent military action against Iran.
Qatar Increases Mediation Efforts Following US Elections
Qatar stepped up mediation efforts following the US elections to avert an escalation of attacks, keeping markets watchful for progress in talks to end the US-Israeli war with Iran. Nevertheless, a high-ranking official in Tehran conveyed to Reuters on Tuesday that Tehran and Washington are still a long way away from reaching an agreement to conclude their conflict.
Earlier coverage: Oil Prices Drop as Iran Signals Strait of Hormuz Plan
