Crude gains on worries about renewed US attacks on Iran

By Erwin Seba

HOUSTON, Nov 6 (Reuters) - Crude futures edged up late on Friday on renewed fears of further US strikes on Iran as US President Donald Trump said he would soon decide whether to pursue a peace agreement or destroy what remains of Iran.

Brent crude futures for January settled at $98.32 a barrel, up 3 cents, or 0.03%. US West Texas Intermediate futures finished at $90.83 a barrel, up 31 cents, or 0.34%. 

The Brent contract is on track for a 17% decline this week, which would be its steepest weekly percentage fall since the start of the COVID pandemic and its biggest in absolute terms, according to LSEG data dating back to 1988.

WTI is set for a 13% decline.

"A bit of unwinding of the war premium seems to be what's going on," said Phil Flynn, senior analyst with Price Futures Group.

 While the US midterm results raised hopes of a potential Iran war de-escalation and more crude exports out of the region, they also raised expectations of tighter US regulations for the AI industry, prompting a dramatic rout in technology stocks on Thursday. [MKTS/GLOB]

In oil markets, signs of an emerging supply excess amid demand destruction were reinforced by spot premiums for Middle Eastern crude benchmarks returning to levels reached before the conflict.

“The crude market is loosening to a state of oversupply based on the balance, but the quality difference still exists as refiners recover what they can take versus what is available," said Rystad oil market analyst Janiv Shah, pointing to longer shipping routes and the need for ship-to-ship transfers as workarounds near the Strait of Hormuz.

"The market is still looking for evidence of a firm deal being signed (on Iran), or any backlash from either party could tighten fundamentals once more.”

Also affecting futures was the strong jobs report issued by the US Department of Labor on Friday, showing an increase of 165,000 jobs last month. 

"We're worried about the Federal Reserve raising interest rates after the jobs report this morning," said John Kilduff, partner with Again Capital. 

Oil prices fell 8% on Wednesday alone after the Democrats swept the US midterm elections, settling at two-month lows.

However, prices rebounded on a surge in tanker attacks in the Gulf and the Strait of Hormuz, renewing concerns over supply flows from the region. 

A Greek ship manager said on Friday that a seafarer was killed in a November 5 explosion on an oil products tanker in the Gulf, believed to have been caused by a missile attack. 

Data from Britain's maritime security agency UKMTO suggested that attacks on oil-carrying ships are still running at close to a record pace.

(Reporting by Erwin Seba, Additional reporting by Shadia Nasralla, Colleen Howe, Helen Clark and Seher DareenEditing by David Goodman, Elaine Hardcastle and Sanjeev Miglani)