According to 3R Investment Management, crude oil prices at $115 per barrel include a significant risk premium that could soften if geopolitical tensions ease. As reported by CNBC TV18, Neeraj Seth, Founder and CIO of 3R Investment Management, believes a combination of a Democratic sweep in US midterm elections and an electoral defeat for Benjamin Netanyahu in Israel could help de-escalate tensions and support a rally in Middle Eastern markets. Seth noted that while this combination would provide some respite, it doesn't completely resolve the underlying problems in the region. Recent developments show December Brent settled at $116.72 on 23 October, its highest since April, with prices easing to about $114.51 on Monday following mediation hopes.
Seth warned that the recent cooling of US bond yields may be temporary, with the long end of the yield curve likely to come under renewed pressure over the next three to six months. According to CNBC TV18, despite the US 10-year Treasury yield recently dipping below the 5% mark, he believes the worst of the stress surrounding rising yields is not over. The concern centers around the long end of the curve driven by fiscal situation, sticky inflation, and demand for capital. Seth expects one or two additional rate hikes from the US Federal Reserve and anticipates political developments surrounding the US midterm elections to contribute to market volatility in the coming weeks.
In recent Brent technical analysis, the near-term range sits between $108 and $117.45. As per market analysis, a daily close above $117.45 could bring $120 into focus, while a close below $108 would open the $105 area. The December Brent expiry on 30 October can distort continuous charts, with the January 2027 contract trading about $5 lower than December. The Brent WTI spread near $13.50 is far wider than any year-end from 2021 to 2025, ranging from $2.57 to $5.65 during that period. This wide spread tends to support US crude exports and can narrow quickly if Gulf risk fades.
On the technology front, Seth expects the artificial intelligence boom to continue, but at a slower pace than seen over the past 12 months. As reported by CNBC TV18, he sees this moderation as positive for India. Seth emphasized that upcoming earnings from hyperscalers will be critical for investors, particularly their capital expenditure projections and free cash flow. Markets are increasingly questioning the return on invested capital from AI investments, with concerns more visible in the neocloud sector than in the share prices of major hyperscalers. He also pointed to widening credit default swap spreads on hyperscalers, which have risen since January and accelerated over the past one to two months.
