| Commoditiy | Price | Weekly Change | 50day-Ave | 100day-Ave | 200day-Ave |
|---|---|---|---|---|---|
| Brent ($/b) | 60.99 | -2.33 | 66.33 | 67.90 | 69.22 |
| US WTI ($/b) | 57.20 | -2.29 | 62.52 | 64.64 | 66.14 |
| ICE Gasoil ($/MT) | 637.25 | -22.50 | 681.06 | 690.17 | 675.80 |
| Jet CIF NWE ($/MT) | 683.54 | -17.78 | 711.75 | 717.13 | 709.34 |
Brent came close to 60 \$/b last week, the lowest it has traded since May. It looked like it was going to Break 60 \$/b on Friday but set a low at 60.14 \$/b and recovered later in the day. It remains under 61 \$/b so far this morning. Brent was vulnerable to testing further lows after it broke an important support level at 65 \$/b in the previous week when Trump announced an extra 100% tariffs on China. On Thursday US equity markets fell on news that two regional US banks said they were the victims of fraud on loans to funds that invest in distressed commercial mortgages. This added to existing worries over stretched AI related valuations of key members of the S&P 500 and led to the market falling sharply. This negative sentiment continued into Friday. This morning, 3rd quarter GDP data for China came in under 5%, again highlighting the weak demand.
The forward curve can tell us information about the state of the physical market and this has changed lately. An upward sloping forward curve is associated with a well-supplied market where participants pay for storage. A downward sloping curve is associated with a tight market as buyers pay a premium for immediate delivery. Over the summer the front end of the curve was quite steeply downward sloping suggesting it was tight. However, comparing to today, the front three contracts are still slightly downward sloping, but from December onwards, the forward curve is now quite steeply upward sloping indicating the market is expecting to pay for storage of the expected surplus.
Current Brent price is close to a number of support levels, 60 \$/b and the April and May lows around 58.50 \$/b. There is another OPEC+ meeting on 2nd of November, and the temptation of members will be to increase production at these lower prices to maintain revenues, which will be a concern for markets. On the other hand, it is possible that Trump’s meeting with Xi that is set to be held sometime next week could lead to an easing of tensions that helps broader markets recover. In the meantime, the oil market might be influenced by equity market sentiment, especially if there are further sharp falls.
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