Paradoxically, the recent, seemingly encouraging, performance of the oil market has shown just how worrying prospects are going forward. Prices are still around $7/bbl higher than at the beginning of October, but the weakness of the last two days demonstrated that in the absence of an actual supply disruption, nothing could provide prolonged price support.
Yesterday, the oil market performed more pirouettes than might be seen at the forthcoming season in the Nutcracker ballet. Bulls were armed with Israel's chat on possible targeting of Iran's oil infrastructure and possible damage from Hurricane Milton while bears with the lack of specific stimulus from China and Hezbollah jawboning a possible truce with Israel.
Oil can keep ascending only for so long purely based on perceptions and not actual supply disruption. Undeniably, the trifecta of money managers covering short speculative bets, the innate fear of missing out on much higher prices, and the still elevated anxiety level amongst investors of a possible and significant supply disruption helped Brent reach its highest level for over a month.
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