Brent gains as supply concerns outweigh diplomacy hopes

The front-month ICE Brent contract has gained by $1.20/bbl on the day, to trade at $115.68/bbl at 09.00 GMT.

IMAGE: Oil pumpjacks. Getty Images

Upward pressure:

Brent crude’s price has felt upward pressure as speculators have raised their bullish bets and supply concerns in the Middle East persist.

Money managers and hedge funds bought a little short of 9,000 lots in the week to 20 October, increasing their net-long positions in ICE Brent futures to over 241,000 lots, according to futures and options data from ICE Futures Europe.

When speculators boost net-long positions, oil prices typically rise.

Persian Gulf crude exports have fallen to 14.30 million b/d, while oil flows through the Strait of Hormuz are running at just 60% of normal levels, ANZ Bank’s senior commodity strategist Daniel Hynes said.

The oil market’s resilience “remains under acute pressure”, Hynes added.

Downward pressure:

Brent’s gains have been capped by renewed diplomatic efforts to ease tensions in the Middle East.

Senior officials from Saudi Arabia, Turkey and Pakistan held talks with Iranian officials in Tehran yesterday, and the four countries agreed to continue talks, Reuters reported, citing Iranian state media.

By Aparupa Mazumder

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