HOUSTON/SINGAPORE: Oil prices surged by over 1 percent on Thursday, nearly erasing losses from the previous session, as tensions in the Middle East resurfaced ahead of the US election, despite mixed US fuel inventory data.
Brent crude futures increased by 95 cents, or 1.27 percent, to $75.91 at 6:02 a.m. Saudi time, while US West Texas Intermediate crude futures climbed $1, or 1.41 percent, to $71.77, as ongoing heavy clashes between Israel and Hezbollah heightened supply concerns.
This week, oil prices have risen nearly 4 percent, offsetting last week's losses of more than 7 percent, which were driven by concerns over Chinese demand and diminishing fears of Middle East conflict disruptions.
"The erratic movement in oil prices reflects a technical response to the uncertainty ahead," said Priyanka Sachdeva, a senior market analyst at Phillip Nova.
"In the absence of supportive catalysts and with prevailing negative sentiment in oil markets, the bullish reaction to any escalation news in the Middle East seems reasonable," she added.
Israel conducted strikes on Damascus early Thursday, according to Syrian state media, marking the latest in a series of attacks amid the Gaza conflict. This followed earlier strikes on Beirut's southern suburbs on Wednesday, after Hezbollah claimed to have fired precision-guided missiles at Israeli targets for the first time.
The escalating hostilities come as Washington makes a final push for peace between Israel and Iran-backed groups Hezbollah and Hamas ahead of the Nov. 5 US presidential election, which could reshape US policy in the Middle East.
The current volatility, ahead of a crucial week with the US Election and the Fed's policy decision, is expected to cause significant fluctuations, even though supply remains abundant, according to Phillip Nova's Sachdeva.
Meanwhile, US crude inventories increased by 5.5 million barrels last week, according to the US Energy Information Administration, surpassing analysts' expectations of a 270,000-barrel rise in a Reuters poll.
Despite the inventory build-up, implied demand continued to rise, noted ANZ analysts in a client note.
On the demand side, support also came from stronger distillate demand, highlighted by JP Morgan analysts, pointing to robust travel demand in Asia and consistent drawdowns in distillate stocks in major markets.
Source link: https://www.arabnews.com
