OIL FUTURES: Crude little changed as Middle East risks ease, SPR plan supports prices

Crude oil futures were little changed in midafternoon trading in Asia on Oct. 29, as the potential for a de-escalation in geopolitical tensions in the Middle East reduced supply risks and the Biden administration's commitment to refill the US Strategic Petroleum Reserve in 2025 supported prices.

At 3:25 pm Singapore time (0725 GMT), the ICE December Brent futures contract was 34 cents/b (0.48%) higher from the previous close at $71.76/b, while the NYMEX November light sweet crude contract increased 26 cents/b (0.39%) to $67.64/b.

The options market has seen an increase in traded volumes and open interest, along with a narrowed volatility skew, after Israeli airstrikes over the weekend avoided Iranian oil infrastructure, reflecting a broader view of diminished supply risks, ING market analysts said. Crude settled down more than 6% on Oct. 28.

"The oil market sold off aggressively yesterday after Israel's measured response over the weekend," said ING's Warren Patterson, head of commodities strategy, and Ewa Manthey, commodities strategist. "While it is still not clear if and how Iran will retaliate, the market is clearly of the view that supply risks have eased for now."

Investors are focused on the latest announcement from the US Department of Energy's (DOE) Office of Petroleum Reserves that the government seeks up to 3 million barrels of crude oil to refill the Strategic Petroleum Reserve, to be delivered in 2025 from April through May, which is helping to support crude oil prices.

Later in the global day Oct. 29, the US Bureau of Labor Statistics will be releasing October data indicating the health of the labor market.

"Consensus expects 8 million job openings for September, similar to 8.04 million in the preceding month, signaling a still robust demand for labor," SAXO analysts said.

However, there are some concerns that the jobs market could slow ahead of the 2024 US elections on Nov. 5. "If that's the case, businesses and consumers could become more cautious in their spending behavior and necessitate the Federal Reserve to take more drastic action to support the US economy," said James Knightley, chief international economist, ING.

Market participants await the Federal decision on interest rates following the Federal Open Market Committee meeting over Nov. 6-7.

Dubai crude

Dubai crude swaps and intermonth spreads narrowed in midafternoon Asian trading on Oct. 29 from the previous close.

The December Dubai swap was pegged at $69.61/b at 2:30 pm Singapore time (0630 GMT), narrowing $1.11/b (1.57%) from the previous Asian close.

The November-December Dubai swap intermonth spread was pegged at 16 cents/b, narrowing 6 cents/b on the session, and the December-January intermonth spread was pegged at 40 cents/b, weakening 3 cents/b on the day.

The December Brent-Dubai exchange of futures for swaps was pegged at $1.72/b, narrowing 5 cents/b from Oct. 28.