Adds new blog post

Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. You can share your thoughts with us at markets.research@thomsonreuters.com

WHY THE OIL PRICE HASN'T BROKEN HIGHER? SOC GEN'S TAKE

If, in early March, you'd had a strange crystal ball that told you the geopolitical state of play in early June, but not market pricing, not many people would have predicted Brent would be trading below $100 a barrel.

The fact that it is, even with the Strait of Hormuz having been effectively closed for months, is one of the big questions for markets, particularly because the really big question is how quickly and suddenly this calm could change.

Reuters energy columnist Ron Bousso writes today that the uncomfortable reality is that "the biggest drivers of today’s energy market are a host of unknowns."

Societe Generale have a note out with 10 reasons why the roughly-14% loss in global crude supply has resulted in only around a 30% price increase. They are:

1. China has cut crude imports from ~11.7mb/d in February to just under 9mb/d by late May.

2. Structural shifts — higher inflation and wages, lower oil intensity, and FX effects — mean today’s prices feel far less painful than in past cycles. They reckon $100 a barrel now is equivalent to around $50-70 two decades ago.

3. Oil consumers running down cheaper inventory, rather than bidding for expensive spot cargoes. This strategy is inherently temporary.

4. Washington’s messaging has played a key role in anchoring markets, with consistent signals of reassurance helping to cap price upside.

5. Elevated volatility, and the higher margin costs that come with it, further discourage large, long positions. Open interest in Brent futures is the lowest since last August.

6. Oil is no longer the dominant market narrative, with investor focus fragmented across themes like AI, equities, and macro.

7. A meaningful supply response in Brazil and Venezuela.

8. The possibility more oil is transiting the Strait of Hormuz than official data suggests.

9. The U.S. continues to anchor global supply by maintaining record crude and product exports

10. The forward curve is signalling long-term comfort.

(Alun John)

*****

EARLIER ON LIVE MARKETS:

NOT AS LOW AS FEARED CLICK HERE

EUROPE BEFORE THE BELL: FUTURES SHARPLY LOWER CLICK HERE

BLISTERING AI RALLY TURNS UGLY CLICK HERE