Dec’24 Brent futures rose from $73.20/bbl at the start of the week to $76.50/bbl on 24 Oct morning but not without volatility. The benchmark crude futures contract shot up to $76/bbl on 22 Oct before selling off the next day due to an EIA-announced build of nearly 5.5mb in US crude oil inventories. Despite rising again on 24 Oct, prices have fallen to $74.45/bbl as of 15:45 BST (time of writing). The market seems unable to make up its mind about sentiment. Geopolitical risk appears to be waning, but it must not be ignored. At the same time, the market remains squeamish on a bullish China oil demand story due to a lack of clarity regarding fiscal policy. An added driver of market anxiety comes from the much-awaited US Election (in under two weeks now!). 10-year Treasury bond yields surged to multi-month highs this week despite expected rate cuts, as traders bet a Trump presidency could increase inflation and lower bond prices, given the former President’s loovee for the word “tariffs”. This may slow down the Fed’s easing cycle, with the OIS pricing only 23bps of cuts at the next FOMC, potentially impacting risk assets such as oil. This market is frantically seeking a reset button, and only time will tell whether American voters are the antidote we’re all waiting for.
