| Commoditiy | Price | Weekly Change | 50day-Ave | 100day-Ave | 200day-Ave |
|---|---|---|---|---|---|
| Brent ($/b) | 108.35 | -7.46 | 103.64 | 93.58 | 93.13 |
| US WTI ($/b) | 99.56 | -2.20 | 94.88 | 86.99 | 86.80 |
| ICE Gasoil ($/MT) | 1,423.75 | -96.50 | 1,435.32 | 1,278.49 | 1,171.69 |
| Jet CIF NWE ($/MT) | 1,447.97 | -106.30 | 1,485.28 | 1,318.69 | 1,264.63 |
Brent is trading lower this morning, although the headline move exaggerates the extent of the decline because there has also been a contract roll. The December contract, which was the front contract on Friday, expired at 117.60 \$/b after trading as high as 118 \$/b shortly before the close, the highest level reached by a Brent contract since the end of April. Following the expiry, January 2027 is now the front contract and is trading around 110 \$/b, which at first glance suggests a fall of more than 7 \$/b. However, the fair comparison is with where January was trading last week. The contract briefly reached 114 \$/b on Friday but has generally traded between 110 and 112 \$/b recently. On that basis, crude is softer this morning, but the underlying move is considerably smaller than the change in the headline front month price suggests.
Some of that softness may reflect reports that President Trump continues to favour giving diplomacy with Iran more time. With the US midterm elections taking place tomorrow, one of the key concerns for oil markets has been the possibility that the US could escalate its military action against Iran once the elections are over. Trump has repeatedly made clear that further action remains an option, and that risk has contributed to the geopolitical premium embedded in crude prices. However, Axios reported that Trump told Israeli Prime Minister Netanyahu that he still favoured diplomacy, while US Secretary of State Marco Rubio said on Saturday that no decision had been made on further strikes and that Trump would prefer a diplomatic solution. The assumption earlier in the conflict that the war would need to be resolved before the midterms has clearly proved wrong, while the collapse of the earlier Memorandum of Understanding demonstrates that markets cannot be confident of a diplomatic breakthrough until all the key points have been agreed. In the meantime, disruption continues, with attacks on shipping in the Strait of Hormuz reported every day since 27 October.
Political uncertainty is becoming increasingly important for the outlook. Irrespective of the result of the midterm elections, the composition of Congress will not change until January, potentially giving Trump a window to continue operating with his party's existing control of both houses. However, if the election result is poor and the conflict with Iran is perceived to have contributed to that outcome, Republican lawmakers could become less willing to support further escalation. There is also uncertainty in Israel following an election that failed to produce a decisive outcome. Overall, this leaves the outlook for energy markets unusually uncertain. There are some indications that the US would prefer to pursue diplomacy, which has helped Brent soften from last week's highs, but persistent attacks on shipping and the continuing possibility of further military action mean that a substantial geopolitical risk premium remains embedded in crude prices.
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