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OIL: Oil Higher, OPEC Delays Extra Output, US$ Falls & Middle East Tensions Rise

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Oil prices are around 1.5% higher today supported by OPEC’s decision to delay its unwinding of output reductions by a month to the end of December as well as threatening comments from Iran. Brent is up 1.5% to $74.20/bbl after an intraday high of around $74.45. WTI is 1.8% higher at $70.70/bbl. The softer US dollar is also supportive of crude (BBDXY -0.7%). The decline is being driven by an unwinding of the Trump trade following a narrowing of the polls.

  • OPEC+ had planned to normalise output after cutting output 2.2mbd starting with a 180kbd increase in December. Its decision to delay a month was driven by concern over downward price pressure from soft China demand and additional non-OPEC supply, according to Reuters.
  • Iran is again ramping up tensions with the Wall Street Journal reporting remarks that it is planning a “strong and complex” strike on Israel. It apparently told allies that the attack would be after the US election but before the January presidential inauguration. The US has said that it won’t restrain Israel if Iran attacks it again. A re-escalation of the conflict risks Iran’s oil facilities thus increasing the chance of crude’s geopolitical risk premium rebuilding.
  • Saudi Aramco is expected to publish its prices this week and a Bloomberg survey shows expectations of a price cut for shipments to Asia.
  • Later US September orders and European October manufacturing PMIs print. ECB’s Elderson, McCaul and Buch make appearances and the eurogroup meeting also takes place. Key events for crude though are Tuesday’s US election and this week’s meeting of China’s legislature standing committee, which may result in further stimulus.
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Oil prices are around 1.5% higher today supported by OPEC’s decision to delay its unwinding of output reductions by a month to the end of December as well as threatening comments from Iran. Brent is up 1.5% to $74.20/bbl after an intraday high of around $74.45. WTI is 1.8% higher at $70.70/bbl. The softer US dollar is also supportive of crude (BBDXY -0.7%). The decline is being driven by an unwinding of the Trump trade following a narrowing of the polls.

  • OPEC+ had planned to normalise output after cutting output 2.2mbd starting with a 180kbd increase in December. Its decision to delay a month was driven by concern over downward price pressure from soft China demand and additional non-OPEC supply, according to Reuters.
  • Iran is again ramping up tensions with the Wall Street Journal reporting remarks that it is planning a “strong and complex” strike on Israel. It apparently told allies that the attack would be after the US election but before the January presidential inauguration. The US has said that it won’t restrain Israel if Iran attacks it again. A re-escalation of the conflict risks Iran’s oil facilities thus increasing the chance of crude’s geopolitical risk premium rebuilding.
  • Saudi Aramco is expected to publish its prices this week and a Bloomberg survey shows expectations of a price cut for shipments to Asia.
  • Later US September orders and European October manufacturing PMIs print. ECB’s Elderson, McCaul and Buch make appearances and the eurogroup meeting also takes place. Key events for crude though are Tuesday’s US election and this week’s meeting of China’s legislature standing committee, which may result in further stimulus.