Oil prices edged higher on Friday, poised for weekly gains as escalating Middle East tensions injected a risk premium into the energy markets. By 08:30 ET (12:30 GMT), Brent oil futures were trading up 0.9% at $75.02 a barrel, while West Texas Intermediate (WTI) Crude futures also rose by 0.9%, reaching $70.84 per barrel.
Weekly Gains for Oil Amid Global Concerns
This week, both Brent and WTI futures are showing over 2% gains, a partial recovery from sharp declines recorded in early October. Oil prices remain buoyed by fears that any escalation in Middle East conflict could potentially disrupt supply, particularly given Israel’s recent tensions with Iran.
Despite the gains, oil prices haven’t fully rebounded due to a larger-than-anticipated build in U.S. oil inventories, signaling that supply remains robust in the world’s top oil-consuming country. Coupled with a strong dollar, which often makes commodities more expensive for foreign buyers, these factors have capped some of oil’s upward momentum.
Middle East Conflict Adds Market Volatility
Oil markets experienced heightened volatility this week due to escalating rhetoric between Israel and Iran, with Israel vowing to retaliate over early October actions. Adding to the uncertainty, U.S. officials are actively working to de-escalate the situation to avoid further market disruptions, especially as the 2024 U.S. presidential election approaches, potentially reshaping U.S. policy in the region.
These heightened geopolitical risks are supporting oil prices as traders remain cautious of potential supply threats. “The market continues to be caught between supply risks related to ongoing Middle East tension and lingering demand concerns,” noted analysts at ING.
China’s Economic Stimulus Efforts in Focus
Outside of the Middle East, oil prices are also influenced by concerns over slowing demand in China, the world’s largest oil importer. Recent economic stimulus measures from Beijing have not yet provided clear indications of timing or scale, leaving traders skeptical about their potential impact on oil demand.
China’s Standing Committee of the National People’s Congress, initially expected to meet in late October, is now scheduled to meet in November to outline fiscal policies. Markets are watching closely for these decisions, as any significant fiscal stimulus could strengthen China’s oil demand outlook, potentially impacting oil prices in the coming months.
In conclusion
Oil prices are set for modest weekly gains as Middle East tensions and demand uncertainties weigh on the market. Stay informed on oil market dynamics with Investor Empires.
Comments are closed, but trackbacks and pingbacks are open.