Brent crude futures slid below the $100 mark on Wednesday for the first time in roughly a month, as optimism over a potential US-Iran agreement overshadowed a surprising decline in US crude inventories. The front-month contract traded at $98.90 by 16:02 GMT, down 4.5% from Tuesday's settlement of $103.60, after touching a session low of $98.67. Earlier in the day, prices had climbed as high as $104.87.
US West Texas Intermediate (WTI) crude also fell 4.5%, trading at $91.79. The last time Brent traded below $100 was on 7 October, when it hit $99.62, and it has not settled under that level since 22 September. According to Bloomberg, the physical Dated Brent benchmark also dropped to its lowest level since September.
EIA Draw Fails to Stem Selling
Brent briefly dipped below $100 shortly after 14:00 GMT before recovering to around $101.40. It hovered near $101.20 at 15:40 GMT, then broke lower in the 15:45 GMT bar and fell through $100 within ten minutes. The slide came despite weekly US government data that would typically support prices. The Energy Information Administration reported a draw of 865,000 barrels in crude stocks for the week to 30 October, against a forecast for a 378,000-barrel decline in an Investing.com consensus.
Distillate inventories dropped by 3.6 million barrels, versus expectations of a 1.1 million-barrel increase, and refinery utilisation rose to 94.5%. The fact that traders sold into the bullish data suggests that geopolitics, rather than US supply, is currently driving the market.
Iran Talks and the Midterms
US President Donald Trump has said there are no immediate plans to strike Iran, stating that “we seem to be getting everything we want.” Iran indicated it could reopen the Strait of Hormuz within two days if its demands on sanctions and frozen assets were met, with Qatar acting as mediator. Bloomberg reported that Trump played down the prospect of strikes after the Democratic sweep in the midterm elections, and that flows through Hormuz were holding near pre-war levels.
“With concessions being made by Iran, it seems that the mood is shifting towards a more secure deal,” said Chris Beauchamp, chief market analyst at IG, in a Reuters report. Supply is also catching up. JPMorgan estimates that the oil market ran a surplus of 1.4 million barrels per day in October, up from 1.1 million in September, according to OilPrice.
Brent Technical Outlook
Wednesday's drop marks Brent's third consecutive daily loss, following a 7.6% slide on Monday, its biggest one-day fall since late July. The $100 level is now the immediate pivot. A settlement below it would be the first since 22 September and would put the October intraday low of $99.62 behind the market. Today's low near $98.67 is the next marker for sellers.
A recovery above $100 would point to a failed breakdown, with Tuesday's $103.60 close as the next resistance. Goldman Sachs still sees Brent at $105 by December.
Should You Buy Oil After Brent's Drop Below $100?
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Traders now watch for Brent's settlement against $100 and for any sign of a signed US-Iran agreement on Hormuz.
This article is for informational purposes only and does not constitute financial advice.
