Oil slips as peace hopes offset Middle East supply fears

what happened

Oil prices fell on Thursday, pulling back from the previous day's gains. Brent futures declined 82 cents, or 0.7%, to $114.50 a barrel, while WTI lost $1.04, or 1.0%, to $101.74. The move followed hopes that peace negotiations could resume, which eased concerns about supply disruptions from the widening conflict in the Middle East. The Wall Street Journal reported that US Vice President JD Vance sent a letter to Iranian Security Council chief Mohsen Rezaei.

The decline was limited, however. Houthi attacks have intensified, and the group said it hit Saudi Arabia's largest refinery, a 550,000-barrel-per-day facility; Riyadh had not immediately confirmed the strike. Traders are also worried that the US could strike Iran after the November 3 midterm elections.

The US Energy Information Administration said crude inventories fell by 1.9 million barrels in the week ended October 23, while analysts had expected a build of 15,000 barrels. Gasoline stocks, by contrast, rose 3.9 million barrels instead of the expected 0.9 million barrel draw.

Two opposing forces are at work. Peace talks reduce the risk premium, while attacks on oil infrastructure and an unexpected drop in crude stocks support prices. The gasoline build, on the other hand, weighs on refiners and gasoline prices.

why it matters

Two opposing forces are at work. Peace talks reduce the risk premium, while attacks on oil infrastructure and an unexpected drop in crude stocks support prices. The gasoline build, on the other hand, weighs on refiners and gasoline prices.

market impact

Oil: peace-talk hopes pressure Brent and WTI, but refinery attacks and EIA data limit the decline

• ↔Brent mixed — peace talks cut the risk premium, while attacks and falling stocks support the price
• ↔WTI mixed — peace hopes weigh on the price, but the crude inventory draw provides support
• ▼Gasoline pressure down — a 3.9 million barrel gasoline stock build points to surplus supply

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