Brent fell 5.85% in a day and closed on Monday, November 9, at $92.57. The session cost $5.75 on this benchmark.
Brent is the reference crude grade; the price of most global supplies is calculated from it. WTI is the American benchmark, the market's second reference point.
Over the past week, Brent fell 16%. This is the worst weekly result since the start of the COVID-19 pandemic, so the move affects everyone who trades commodities.
How deep did oil fall?
- $92.57 - Brent's close on Monday, down $5.75 for the session.
- $86.85 - WTI's close, down $3.98, or 4.38%.
- $98.32 - Brent's price last Friday.
- More than $7 was lost by Brent after the close, WTI - more than $5.
Cheaper in the morning. On Tuesday at 04:02 MSK, Reuters showed Brent at $92.33 and WTI at $86.50. Trading Economics later gave $91.12, the Asian session low - $91.47.
Current levels are the lowest since late August.
Why did the market reverse?
- Trump's words. On Sunday, Donald Trump said new strikes on Iran are highly unlikely while talks are ongoing.
- Clarification later. He added that a military operation is "not needed at this stage."
- Regional pressure. Before that, regional governments had appealed to him, including the Prime Minister of Qatar at the White House.
Market interpretation. Tim Waterer of KCM Trade believes the market is pricing in Trump's conciliatory tone after the midterm elections.
What is weighing on the price besides politics?
More oil than needed. JPMorgan estimated the global oil surplus in October at 1.4 million barrels per day.
- 22.87 million barrels per day - OPEC production in October, up 1.38 million (Reuters survey).
- Dated Brent moved into a discount to the front-month futures - a sign of weakness in the physical market, notes Morgan Stanley.
Dated Brent is the price of actual crude cargoes for delivery.
Has the risk gone away?
The conflict is not over. The US naval blockade of the Strait of Hormuz remains in place for now.
- Seven conditions. Tehran will not sit at the table until Washington fulfills seven conditions of the June interim agreement, a senior security official said.
- Strikes on vessels. Both sides reported attacks in the strait area.
- Saudi Aramco. Gelber & Associates also recalls the attack on the company's offices.
What's next?
- Today, 16:30 MSK - US CPI for October.
- Today - EIA short-term forecast.
- Wednesday, November 11 - OPEC monthly report.
Publication times are in the economic calendar. It is more convenient to compare conditions for volatile commodities in the challenge calculator.
Key point: the benchmarks in this review are $98 on top and $88 on the bottom.
Watched Brent crash by six dollars?
Anyone with a terminal open saw Brent lose six dollars in a single session. The question is scale. On a deposit of a couple thousand, such a move yields enough for dinner. In prop trading, position size does not depend on your deposit: the trading notional is provided by the company, you work within its loss limits and share the result under the contract. Understanding the mechanics is easier now than on the night of another reversal over Hormuz.