Oil futures: Crude steadies at lower levels, focus pivots to fundamentals
Quantum Commodity Intelligence – Crude oil futures Tuesday were little changed on the day after Israel's limited attack on Iran had sent prices tumbling to around one-month lows during the previous session.
Front-month Dec24 ICE Brent futures were trading at $71.31/b (1815 GMT), compared to Monday's settle of $71.42/b, while the more-liquid Jan25 contract was trading at $70.89/b.
At the same time Dec24 NYMEX WTI was trading at $67.33/b versus Monday's settle of $67.38/b.
Analysts and investors were largely in agreement that Israel's widely flagged response to Tehran's early-October missile attack had been measured, striking Iranian military sites.
"The more targeted response from Israel leaves the door open for de-escalation and clearly the price action suggests the market is of the same view," said Warren Patterson, head of ING's commodity research.
Satellite images revealed damage to several military sites, including locations used for missile production and air defence.
Prices came under further downwards pressure late Tuesday amid reports that regional ceasefire talks could make progress in the coming days.
Threat
With the immediate threat to Middle East oil supplies seen easing, attention pivoted back to the demand side and broader fundamentals, including potential oversupply issues.
OPEC+ is scheduled to start pumping additional barrels this quarter, but any final decision is likely to be deferred until initial production figures for October are available as overproducers Iraq, Kazakhstan and Russia remain under scrutiny.
As it stands, the group is scheduled to start raising output in December, with plans to restore around 2.2 million bpd of voluntary cuts over the next 12 months.
Slowing demand growth amid a weak economic backdrop is also being watched, raising concerns about a supply surplus in Q1 2025.
Meanwhile, Wells Fargo expects the US Fed to reduce interest rates by 25 bps at its upcoming meeting on 7 November.
"Since the Committee last met, US economic activity has generally surprised to the upside and suggested ongoing resilience," said the US bank in a client note.