USO, UCO Slide As Brent Retreats On US-Iran De-escalation Hopes – But Goldman Reportedly Sees Oil At $105 In December

• Goldman Sachs lifted its December Brent forecast to $105 a barrel from $90 and raised its 2027 average outlook by 10% to $88, according to a Bloomberg report.
• Analysts factored in a potential one-million-barrel-per-day global supply disruption in 2027, citing risks to Middle East shipping and energy infrastructure.
• Morgan Stanley and ANZ also raised their year-end Brent forecasts to $105 a barrel, reflecting growing concerns over supply disruptions.

Oil markets are facing conflicting signals, with hopes of a diplomatic breakthrough between the US and Iran weighing on crude prices even as growing concerns over Middle East supply disruptions prompt major Wall Street banks to raise their forecasts.

Goldman Sachs has reportedly raised its December Brent price forecast to $105 a barrel, despite crude futures falling more than 3% on Monday amid continued US-Iran negotiations. Oil-linked ETFs also traded lower, reflecting the pullback in crude prices.

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Crude Futures Retreat As Peace Talks Continue

Oil prices moved lower overnight after Iranian and Qatari officials held talks for a third consecutive day to push for an agreement to end the U.S.-Israeli war on Iran. 

U.S. Secretary of State Marco Rubio said President Donald Trump would prefer a diplomatic resolution to the conflict with Iran rather than resorting to military action. According to a CNBC report, while speaking to reporters over the weekend, Rubio said Trump had not yet decided on the next course of action but remained confident in the U.S. military's ability to carry out an operation if necessary. He added that Washington would prefer to resolve the conflict peacefully.

However, an Axios report, citing Israeli and U.S. sources, offered a contrasting picture of the behind-the-scenes discussions. Trump reportedly held a phone call with Israeli Prime Minister Benjamin Netanyahu on Saturday to discuss negotiations with Iran and the possibility of returning to military action. According to the report, Netanyahu is pressing Trump to strike Iran immediately after Tuesday’s U.S. midterm elections, while Trump wants to give diplomatic negotiations more time.

At the time of writing at 1.30 a.m. ET, global benchmark Brent crude futures had fallen 3% to $110.05 a barrel, while US West Texas Intermediate crude ​was $100.71 a barrel, down 3.3%.

Brent rallied 14% in October, ending the month at its highest level in six months as concerns grew over a possible escalation in hostilities between Washington and Tehran following the U.S. midterm elections.

Goldman Sees Brent At $105 In December

Goldman expects Brent crude to reach $105 a barrel in December, compared with its earlier forecast of $90, according to a Bloomberg report. Its average price projection for 2027 has also been increased by 10% to $88 a barrel. The analysts said the bank had also revised its outlook for US benchmark West Texas Intermediate (WTI).

The Bloomberg report, citing a November 1 research note from Goldman Sachs analysts, said persistent supply concerns were likely to keep a significant “near-term risk premium” in oil prices. They added that markets were increasingly factoring in the possibility of an escalation in the U.S.-Iran conflict after the November 3 U.S. midterm elections, which could affect Middle East energy supplies.

Middle East Tensions Keep Supply Concerns Alive

President Donald Trump has repeatedly hinted at the possibility of resuming airstrikes, while Iran's Supreme Leader has directed senior military commanders to prepare for a renewed confrontation.

Goldman analysts identified intensified attacks on shipping and damage to energy infrastructure as potential triggers for further price increases. They also flagged risks linked to Russia's invasion of Ukraine, the Bloomberg report said.

The bank has incorporated an allowance for a potential global supply disruption of one million barrels per day in its 2027 base-case projections, citing the difficulty of predicting when and where supply interruptions could occur.

Morgan Stanley and ANZ Group Holdings have also raised their oil price outlooks. Morgan Stanley increased its fourth-quarter forecast for Dated Brent, an important physical oil benchmark, to $105 a barrel, while ANZ lifted its year-end Brent futures projection to the same level.

USO, UCO Fall As Retail Sentiment Turns Bearish

Oil-linked exchange-traded funds (ETFs) also traded lower in the overnight session on Monday. The United States Oil Fund (USO), which tracks WTI prices, fell 2.5%, while the ProShares Ultra Bloomberg Crude Oil ETF (UCO) declined 3.3%. Stocktwits retail sentiment for both USO and UCO was ‘bearish.’

ProShares Ultra Bloomberg Natural Gas (BOIL), however, was up around 2.4%, and the sentiment was ‘extremely bullish.’ 

SPY, DIA, QQQ: Stocktwits Retail Sentiment

U.S. equities traded higher overnight. At the time of writing, the SPDR S&P 500 ETF (SPY) gained 0.56%, while the SPDR Dow Jones Industrial Average ETF Trust (DIA) advanced 0.38%. The Invesco QQQ Trust ETF (QQQ), which tracks the Nasdaq-100, was up 1.05%.

Stocktwits retail sentiment for SPY was ‘bullish,’ while it was ‘bearish’ for DIA. Sentiment for QQQ remained ‘neutral.’

Also See: ASTS Stock Jumps Overnight: Vanguard, Rakuten Unit Boost Holdings — Why Are Retail Traders Still Bearish? 

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