Oil rose as traders continued to monitor events in Israel and Gaza and OPEC+ leaders said they would act pre-emptively to balance markets.
(Bloomberg) — Oil rose as traders continued to monitor events in Israel and Gaza and OPEC+ leaders said they would act pre-emptively to balance markets.
West Texas Intermediate added as much as 1.9% to trade near $85 a barrel. Prices were on a firmer footing despite an International Energy Agency report citing signs that demand in some regions was being destroyed. There were also headwinds from the dollar after US inflation data came in slightly hotter than expected.
Israeli military forces are continuing to amass along the border of the Gaza Strip ahead of an expected ground assault into the enclave in a bid to wipe out Hamas following the group’s attacks last weekend. Speaking in a joint interview on Russian state TV, Saudi Energy Minister Prince Abdulaziz bin Salman said oil producers will continue to act to support the market.
Oil has had a volatile ride this week following the initial shock of the Hamas assault, with traders seeking to price in the potential repercussions. There are concerns that the conflict may spread across the region, endangering crude flows. In addition, prices have swung on data showing record-high US production, and the possibility of a deal between the US and Venezuela that may boost crude flows.
“The conflict seems to evolve along the usual geopolitical playbook,” said Norbert Ruecker, an analyst at Julius Baer. “The shock temporarily lifts prices until uncertainty ebbs again, and the oil market returns to its previous state.”
Saudi Arabia and Russia have spearheaded deep output cuts this year in a bid to drain inventories and boost prices, with their voluntary curbs augmenting a broader collective OPEC+ deal to pare production. The restrictions underpinned a major rally in the third quarter, with Brent at one point nearing $100 a barrel.
US inventory levels will also be in focus today after the industry-funded American Petroleum Institute reported a jump of almost 13 million barrels in nationwide stockpiles. However, inventories at the Cushing, Oklahoma, hub dropped back toward critically low levels. Official figures are due later on Thursday.
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