Oil Is Waiting with Optimism for U.S. Presidential Elections

Brent crude oil prices have risen by 4.0% to $76.20 per barrel, recovering from last week's sharp 7.5% drop to $72.69, the lowest in October. The recovery is driven mainly by geopolitical tensions, with investors responding to Israel's ongoing military actions. Although Israel backed away from plans to target Iran's nuclear and oil infrastructure, its continued attacks on Hamas and Hezbollah keep the Middle East conflict a key factor affecting oil prices.

This week, the Israeli military confirmed the killing of Hashem Safieddine, a key Hezbollah leader, which intensified concerns in the region. Israel's strikes on Lebanon, especially the port of Tyre, overshadow diplomatic efforts by U.S. Secretary of State Antony Blinken, who is working to de-escalate tensions. With the U.S. presidential election approaching on November 5, the situation in the Middle East remains volatile, keeping upward pressure on oil prices.

Additionally, China's economy is another critical factor. The People's Bank of China cut its benchmark lending rate by 25 basis points to 3.10%, signaling efforts to stimulate growth. As a major importer of commodities, any positive economic signals from China are seen as supportive of higher oil prices. Saudi Aramco CEO Amin Nasser also expressed optimism about China's future oil demand.

However, U.S. oil inventories rose unexpectedly by 5.47 million barrels, far exceeding the anticipated 800,000-barrel increase, which briefly interrupted the upward trend in oil prices. Despite this, large investors remain bullish. The United States Oil Fund (USO) saw net inflows of $14.4 million last week and an additional $69.1 million this week, indicating confidence in further price gains.

Brent prices are expected to continue trading within the $70.00-80.00 per barrel range ahead of the U.S. elections, but a breakout above $80.00 per barrel is possible afterward, depending on the geopolitical situation and market sentiment.