Iran Vow To Strike Israel From Iraq "Jolts" Crude Prices

Meanwhile, the U.S. elections continue to influence oil trading: File Image/Pixabay

With the U.S. presidential election only days away, traders early on Thursday bet on stronger fuel demand in that country as well as on the Organization of the Petroleum Exporting Countries (OPEC) delaying a planned production increase – leading to another round of gains that intensified later in the session.

Andrew Lipow, president of Lipow Oil Associates, said, "The market is trying to figure out the impact of a Harris or Trump administration on oil production, sanctions and prices," and he added that the elections would even eclipse geopolitical hostilities unless something of significance occurred in the Middle East.

Ironically, immediately following Lipow's statement came a report that Iran is preparing to attack Israel from Iraqi territory in the coming days.

Brent settled up $2.10 to $74.26 per barrel, and West Texas Intermediate settled up $2.15 to $70.76.

Traders' nascent bullishness was a lingering effect of the previous session's announcement of U.S. gasoline stockpiles falling to a two-year low in the week ending Oct. 25, as well as a surprise drawdown of crude inventories.

As for whether OPEC will delay an output increase in December by a month or more due to demand concerns and rising supply, a decision could come as early as next week, according to sources.

Meanwhile, analysts weighed in on crude trading behaviour for October: Matthew Polyak, managing partner at Hummingbird Capital, told MarketWatch, "It's certainly been a volatile oil market this month, especially with last Monday showing the largest daily [percentage] decline in over 2 years."

Moving forward, Stephen Innes, managing partner at SPI Asset Management, said in a note with regards to the U.S. stockpile declines, "Add in hopes for a China-driven stimulus surge and rumours that OPEC may push back its production increases, and you've got a recipe for some short-term buoyancy in oil."

Also with an eye to what may happen in trading circles in the near future now that Iran seems bent on escalating hostilities in the Middle East, Bloomberg stated: "Crude's risk premium tied to the Middle East conflict is roaring back; while Axios reported that Iran's plan to use Iraq-based militias may be an attempt to avoid another Israeli attack on its own territory, the mere mention of a second major OPEC producer potentially becoming involved in the conflict was enough to jolt crude prices."

Rebecca Babin, senior energy trader at CIBC Private Wealth Group, added, "This is like a balloon that gets inflated and deflated — we are now blowing a little air back into the geopolitical risk premium."