Oil: Middle East risks keep Brent above $100 - ING

FXStreet Insights Team FXStreet

ING analysts Warren Patterson and Ewa Manthey note that Oil remains supported, with ICE Brent trading comfortably above $100/bbl as Middle East tensions and concerns over flows through the Strait of Hormuz sustain a risk premium. They highlight IEA members’ plan to release remaining emergency reserves and discuss US inventory draws and potential US dissatisfaction with diesel release volumes.

Middle East risk keeps Brent elevated

"Oil remains well-supported. A pattern has set in: prices slide early in the session, then claw back most of those losses by the close. As a result, ICE Brent continues to comfortably trade above $100/bbl. Uncertainty in the Middle East and concerns over the sustainability of oil flows through the Strait of Hormuz has the market pricing in a significant risk premium.

"The longer this pickup in flows continues, the more likely the market will start giving back some of this risk premium. In order to see a full removal, there needs to be some kind of agreement between the US and Iran. This would provide the market with more confidence that stronger oil flows from the region will continue."

"International Energy Agency members agreed to release the remaining 100m barrels of oil from strategic reserves. It's part of the initial 400m barrels that members agreed back in March to help with the Persian Gulf supply shortfall. According to the IEA, members have distributed around 330m barrels to date."

"From the 100m barrels to be released, 20m barrels will be diesel, and will make its way onto the market as soon as possible. The US probably won’t be happy with the scale of the release, particularly regarding diesel. Initial suggestions were that we could see around 50m barrels of diesel released."

"The latest data from the EIA shows that US commercial crude oil inventories fell by 8.56m barrels over the last week, which is the largest weekly decline since February. Hurricane activity in the Gulf played part in the inventory decline, with offshore production shut in due to the storm. US output is estimated to have fallen by 300k b/d week-on-week."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

AUD/USD rises to 0.6950 as USD slips on Fed's Warsh

AUD/USD regains traction and extends the bounce toward 0.6950 in the Asian session on Friday. Fed Chair Warsh's comments reinforce the selling pressure on the US Dollar, allowing the pair to stretch higher. Warsh said that he remains committed to delivering price stability without giving away anything on future interest rate path.

USD/JPY falls in symc with USD, gives up 158.00 after Warsh's speech

USD/JPY has come under fresh selling pressure and gives up 158.00 in the Asian session on Friday amid the emergence of fresh US Dollar selling. Fed Chair Warsh's non-committal commentary on the future tightening path, weighs on the US Dollar and the pair.

$4,200: Back in sight for Gold after Warsh’s silence on interest rate outlook

Gold is looking to build on its recent recovery, reverting toward $4,200 in the early European hours, as traders digest US Fed Kevin Warsh’s neutral remarks delivered at the Fireside Chat with International Monetary Fund (IMF) Managing Director Kristalina Georgieva in Bangkok.

Bitcoin holds $80,500; Ethereum rebounds, Ripple weakens

Bitcoin (BTC), Ethereum (ETH) and Ripple (XRP) show mixed price action on Friday, with BTC and ETH holding above key support levels while XRP struggles below key resistance. Meanwhile, sticky inflation figures have dampened risk appetite, and momentum indicators for these top three cryptocurrencies have also weakened, signaling a risk of a deeper correction if key support fails to hold.

US midterms put fiscal policy under the spotlight, treasury sell-off raises risk

The US will hold its midterm elections - a de facto referendum on the Trump administration - on 3rd November after two years shaped by rising trade protectionism, attacks on Federal Reserve independence and, since the spring, the Iran war. Republicans are expected to take a heavy electoral hit.

Everyone's dumping Gold after hot US inflation. Here's why $4,100 could be a floor, not a cliff

Gold (XAU/USD) is recovering from a sharp sell-off triggered by hotter-than-expected United States (US) inflation data released on Wednesday. The precious metal briefly plunged toward $4,073 as investors increased their bets on further Federal Reserve (Fed) interest rate hikes before recovering as US Treasury yields and the US Dollar (USD) reversed their initial gains.