WTI and Brent Climb as Traders Weigh Mixed Market Signals

by Bloomberg

Mia Gindis and Maggie Eastland

| Thursday, November 07, 2024 | 3:51 PM EST

Oil rose, tracking equity markets, as traders digested competing narratives on how Donald Trump’s presidency will affect the crude market.

West Texas Intermediate advanced 0.9% to settle above $72 a barrel, helped by the weakening dollar and climbing equities. Global benchmark Brent rose to settle just below $76.

Citigroup Inc. said a Trump presidency may be net bearish for crude prices on prospects for higher production and new tariffs that may further crimp China’s economy. Others, including Standard Chartered, say oil explorers may ignore Trump’s call for more drilling.

At the same time, many traders are bracing for a renewed US clampdown on Iran via sanctions and a potential flare-up in the Middle East conflict. A Trump administration’s effect on Russian barrels is another geopolitical factor. Russian President Vladimir Putin congratulated Trump on Thursday and said his proposals on Ukraine deserve attention.

“There are several opposing forces,” said Warren Patterson, head of commodities strategy at ING Groep NV. “On the bullish side, you have the potential for stricter enforcement of sanctions against Iran and more upside to 2025 US GDP growth. However, USD strength, and the prospects for an increase in oil-and-gas leasing on federal lands is more bearish.”

Crude has been largely range-bound since mid-October in the face of conflicting factors. Top trader Vitol Group said that while the market looks slightly bearish next year, it’s too early to be certain that it will be oversupplied.

“There’s clearly a little bit of concern around the balances for 2025; that’s what’s driving the market,” Russell Hardy, chief executive officer of the trading giant, said at the FT Commodities Asia Summit in Singapore, noting scope for supply growth in the US, Guyana and Brazil.

Still, the market is “not in bad shape,” he added, with crude and some petroleum products in a bullish backwardation structure in which closer-dated futures trade at a premium to further-out contracts, signaling solid demand.

On the weather front, Hurricane Rafael slammed Cuba with Category 3 winds, though the system is now expected to weaken. The storm is anticipated to steer clear of most offshore oil installations.

Oil Prices:

WTI for December delivery rose 0.9% to settle at $72.36 a barrel.
Brent for January settlement climbed 0.9% to settle at $75.63 a barrel.

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