Oil Fell On Talks And The Ships Were Still Being Hit

At 8:50 this morning Brent crude futures stood at 106.76 a barrel, down 5.9 percent, Reuters reported, after a gain of more than 2 percent in Friday’s session, and the reason on the wire was a conversation. Iranian and Qatari officials had talked about ending the war, and Tehran’s foreign ministry said on Monday that contacts with the United States are continuing, Reuters reported.

The same weekend produced a different set of facts on the water. On Sunday a merchant vessel’s master sent a Mayday saying another vessel had been struck by an unknown projectile in the Strait of Hormuz, the UK Maritime Trade Operations agency said, with no vessel named and no injuries reported, Arab News reported. Iran’s Revolutionary Guard Navy said two oil tankers exploded after hitting mines on an unauthorized route, Iranian state media reported, and Qatar’s state news agency said a Qatari gas carrier, the Al-Mayeda, was attacked with unidentified objects on Friday, with no one hurt and the ship still operating.

This letter attributes no attack to any party beyond what that party itself claims, and it cannot say whether the Sunday vessel is one of the two tankers the Guard described.

The politics ran in the other direction. Before a Sunday rally in Iowa, President Trump told Right Side Broadcasting Network, as CBS News reported, that Iran would either agree to terms or the United States would end it. Axios, citing sources, reported that he told Prime Minister Benjamin Netanyahu he wanted more time for diplomacy before further strikes, and Secretary of State Marco Rubio said Saturday that no decision had been made on renewed strikes, The National reported. An Iranian delegation was in Qatar on Saturday, Bloomberg reported.

Friday’s settlements came before any of that. The more active January Brent contract settled at 113.43, up 2.37 percent, and WTI at 104.12, up 2.08 percent, CappNotes reported, and The National carried the same levels. Both tie to Thursday’s settlements of 110.80 and 102.00 printed in Friday’s letter.

Friday the price rose on a tanker. Monday it fell on a conversation.

Oil now trades against a calendar with political dates on it, and the dates are public. Tuesday 3 November is the midterm vote, and The National reported on 30 October that Trump had said Washington would not strike Iran before it. The Associated Press, citing diplomats, reported on 29 October that American officials had told regional countries to prepare for possible renewed action after the ballots are cast.

The producers keep a calendar of their own. OPEC plus met online on Sunday, seven core members including Saudi Arabia and Russia, and left its December output targets unchanged, according to a report dated 2 November that named no agency. The group still has to finish a review of member capacity, expected by mid-November, before the full 21-member meeting on 29 November sets the framework for 2027, and Jorge Leon of the consultancy Rystad called that “the much more important test.”

Nothing on the list has happened yet.

On Friday the Brent contract touched about 118 during the session, an intraday level, The National reported, and settled at 113.43. A Hormuz tanker attack the night before was described by the UK Maritime Trade Operations agency as explosives attached to a hull and not a projectile, as first reported, and the same article did not say who carried it out. An analyst quoted there said fears of American strikes were keeping the supply risk premium high.

Gold took the other side of Friday. December gold settled at 3,898.90 an ounce, down 3.3 percent, CappNotes reported, against 4,031.70 on Thursday, a drop that ties to the percentage. Gold futures were up 0.30 percent at 3,910.60 at 7:12 a.m. Eastern, TheStreet reported, an early reading. The sources this letter has read do not explain Friday’s drop, and this letter gives none.

The Revolutionary Guard says tankers hit mines on a route they were not authorized to use. The president says it ends one way or another. Brent says 106.76.

Friday’s closes, per CappNotes: the S&P 500 at 7,580.07, down 1.82 percent; the Dow at 51,770.31, down 1.09 percent; the Nasdaq Composite at 25,437.00, down 2.86 percent; the Russell 2000 at 2,811.84, down 1.66 percent; the VIX at 19.42. Each figure ties to Thursday’s close printed in Friday’s letter. The ten-year Treasury yield closed at 4.94 percent, down 4 basis points, on the figures CappNotes cites from the Treasury curve.

At 8:50 this morning Dow futures were up 307 points, or 0.59 percent, S&P 500 futures up 37 points, or 0.49 percent, and Nasdaq 100 futures up 245.75 points, or 0.86 percent, Reuters reported. Those are premarket quotes. TheStreet reported that Apple reports after the close today.

The dates ahead are fixed. The midterm elections are Tuesday 3 November. The Labor Department’s October employment report is due at 8:30 a.m. Eastern on Friday 6 November. The second estimate of third-quarter growth is due 25 November, and OPEC plus meets 29 November. The Fed’s next decision is Wednesday 9 December.

AAA’s page dated 2 November put regular gasoline at 4.1694 a gallon, against 4.3961 a month ago and 3.0361 a year ago, with diesel at 6.2921.