Oil futures: Crude extends losses, focus on Federal Reserve
Quantum Commodity Intelligence – Crude oil futures Tuesday were again drifting lower, extending the week's losses after slumping by around 3% in the previous session.
Front-month Jan24 ICE Brent futures were trading at $85.29/b (1730 GMT), compared to Monday's settle of $86.35/b, while the Dec23 contract last traded at $87.48/b ahead of the expiry.
At the same time Dec23 NYMEX WTI was trading $81.28/b, versus Monday's settle of $82.31/b, as markets retreated to the lowest levels seen since the 7 October Hamas attack on Israel.
Prices retreated after Israel slowed the pace of its ground invasion of Gaza in what officials have described as the second phase of its war against Hamas that could last for "months".
"Crude oil prices have slipped back from their Friday peaks as the Israeli incursion into Gaza turns out to be a more measured affair than many had initially feared it might have been," said Michael Hewson of CMC Markets.
"Despite the increase in the geopolitical temperature over the past few weeks oil prices have shown little sign of getting close to their September peaks, as concerns about weak demand outweigh concerns over supply disruption and the spreading of the conflict beyond the current protagonists," added Hewson.
International negotiators were also working on plans to bring more humanitarian aid into Gaza, although any sign of a longer-term ceasefire and the release of Israeli hostages seemed to be some way off.
US Secretary of State Antony Blinken met on Monday with the Qatari Prime Minister Al Thani about the Gaza war, while regional reports said Israel had also sent officials to Doha, although it was unclear in what capacity.
Qatar acts as the primary mediator between the international community and Hamas leadership.
US National Security Adviser Jake Sullivan on Tuesday also met with Saudi Arabia’s Defense Minister Prince Khalid bin Salman to discuss de-escalation efforts leading to a ceasefire.
However, analysts said supply concerns continue to linger, lending some support to oil prices.
Federal Reserve
Focus also turned to the US Federal Reserve meeting on Wednesday, and while the central bank is expected to keep interest rates unchanged, investors will be looking for any clues on future rate policy.
Meanwhile, Europe's Economic Sentiment Indicator (ESI) in October fell for a sixth straight month, although the drop was relatively mild - dipping from 93.4 to 93.3.
"ESI has been indicating that conditions have weakened more or less throughout 2023. With GDP growth already in broad stagnation, we expect that trend to continue in the fourth quarter," said the ING Global Economics Team in a client note.
China's official manufacturing purchasing managers' index came in below expectations at 49.5 in October, down from 50.2 in September. The non-manufacturing PMI was also lower at 50.6 in October versus 51.7 in September.
