#BrentCrudeFallsBelow100 $XTIUSD $XBRUSD #DailyStandouts

Brent fell below $100 on Wednesday for the first time since October 7, then kept sliding on Thursday to around $93.6, its lowest in about two months. Everyone is asking if this is the start of a bigger fall or just a pause. I think the better question is what exactly got sold. Here is my full read.

The size of the move

Brent was near $118 last Friday, settled at $103.60 on Tuesday, and settled around $94.60 on Wednesday. Thursday is trading near $93.6. That is a fall of about 20% from the peak in four sessions, by my math. It was also the biggest one day drop since April. And even after all that, oil is still about 60% higher than at the start of the year. So this is a big drop from a very high place, not a return to normal.

What actually changed

It was not a sudden flood of supply or a collapse in demand. The trigger was politics. After the Democratic win, traders bet that pressure will grow to end the Iran war. The President said there are no immediate plans to strike, and Qatar is working on a draft deal that could restart direct talks within days. A surprise drop in US crude stocks did not stop the fall. That tells me the war premium is being taken out of the price.

Paper barrels and real barrels

One report had Murban physical crude near $100.90 while Brent futures were near $93.6. That is a gap of about $7, by my math. If true, futures are pricing the hope of a deal while real barrels still price a tight market, since the Hormuz disruption has not gone away. When paper and physical disagree, I stay careful.

What lower oil means for inflation

A $24 drop per barrel cuts crude cost by about 58 cents a gallon, since a barrel holds 42 gallons. Pump prices pass that on slowly and only partly. For the Fed, which markets still see raising rates in December with about 80% odds, lower oil can soften the hawkish case if it lasts. One week of falling oil will not decide it alone. Tomorrow’s payrolls and next week’s inflation data matter just as much.

Why risk assets care

The same Iran headline moved oil, yields, the dollar and stocks together. Oil fell, yields fell, the dollar slipped, the Nasdaq rose about 1.4%, Bitcoin got back over $80,000 and gold went above $4,100. That is one trade, not five. If talks fail, I would expect many of those moves to reverse together.

Levels from my charts

My WTI chart shows 88.12, which was Wednesday’s settle. Its support line at 87.85 has already given way, with WTI trading near 87.1. Resistance sits at 96.86, which is 9.9% above, then 98.03, 99.05 and 107.19, which is 21.6% above. My Brent chart shows 98.12 with its support at 97.82, so price is at or below it. Resistance is 107.59, 110.28 and 111.05. That chart is a few percent above the futures price, so it may follow a different contract, so please refresh it. RSI is about 33 for Brent and 34 for WTI, close to oversold. After a 20% drop, a bounce is normal even in a downtrend. From $93.6, a move back to $100 is about 7% and a return to Tuesday’s $103.60 is about 11%.

My take: this is war premium coming out, and premium can come back on one headline. I am not trying to catch the bottom or short the break. I will watch whether Brent can close a day back above $100. If it does, the deal hope is fading. If it stays below, I treat lower oil as a help for inflation, not a finished story.

Not financial advice.

Do you think oil bounces quickly because the deal is not done, or keeps falling as the premium drains out? And does cheaper oil change how you see rate hikes and risk assets?

@Gate_Square