Oil prices declined for a fourth consecutive session on Thursday, amid expectations that the Republican Party's losses in this week's congressional elections could reduce the likelihood of further escalation in the US-Israeli war against Iran.
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Brent crude futures fell by 97 cents, or 1.03%, to $93.65 a barrel by 02:11 GMT, while US West Texas Intermediate (WTI) crude futures dropped by $1.14, or 1.29%, to $86.98 a barrel.
Both benchmarks plunged by more than 8% in the previous session, settling at their lowest levels since August 31.
Two sources close to Gulf government circles said on Wednesday that US President Donald Trump, facing a weakened political position and a Democratic-led Congress capable of limiting his military options, has greater incentives to pursue a negotiated settlement. They added that a full-scale attack on Iran now appears less likely.
An end to the conflict could allow oil flows from the Middle East, which have been disrupted by the war, to resume. However, analysts warn that the outlook remains uncertain.
Oil shipments through the Strait of Hormuz have recovered to levels close to those recorded before the war, although at higher costs, according to analysts.
In a note issued Wednesday, JPMorgan said the resumption of Gulf supplies had returned the global oil market to a surplus following months of war-related disruptions.
According to the bank's estimates, the market recorded a surplus of 1.1 million barrels per day in September, widening to 1.4 million barrels per day in October, approaching last year's average of 1.3 million barrels per day.
Nevertheless, the sharp decline in oil prices may prove short-lived.
Mukesh Sahdev, chief executive of energy consultancy XAnalysts, responded to a question about whether prices were likely to remain low following the elections by saying: "The short answer is no."
Sahdev noted that geopolitical risks remain difficult to predict, adding that the new Congress will not take office until January, meaning US policy options will not change immediately.
He also pointed out that commercial oil inventories in major consuming countries are approaching their lowest levels in 15 years, adding that Iran could emerge from the US election results with a stronger determination to maintain its positions.
Meanwhile, the US Energy Information Administration reported on Wednesday that US inventories of crude oil, gasoline and distillates all declined last week, while demand reached its highest level in a year.
Source: Reuters
