Oil prices recovered on worries that the Israel-Hamas conflict might escalate, causing broader disruptions in the supply chain.
On October 24’s Asian afternoon session, Brent oil futures for December delivery rose by 0.24% to $90.05. Also, West Texas Intermediate (WTI) rose 0.21% to $85.67 per barrel.
Economist Yuki Takashima noted market adjustment after recent declines, driven by persistent Middle East supply disruption concerns.
Reports indicate a 3.00% drop in crude prices on Monday due to increased Arab region diplomacy to ease supply disruption concerns. The conflict between Israel and Hamas persisted, with ongoing missile exchanges and the prospect of an Israeli ground assault in Gaza.
Oil prices saw two weeks of significant but fluctuating gains as the Israel-Gaza conflict began. However, this week saw a sharp retreat in oil prices due to profit-taking and the lack of major conflict escalation.
Analysts expect WTI to move between $80-$90 per barrel while eyeing the situations in Israel and Gaza. Following the observation on the Organization of the Petroleum Exporting Countries (OPEC) production and the pace of China’s demand recoup.
Furthermore, experts foresee that US crude stockpiles were expected to surge last week while distillate and gasoline inventories declined.
This week’s spotlight is on crucial economic data and the European Central Bank (ECB) meeting, offering insights into future oil demand.
Mideast Conflict Shifts Oil Investors to Brent
Portfolio investors cautiously reentered the oil market last week after three weeks of heavy selling amid Middle East conflict concerns.
The threat to Cushing inventories waned, reducing interest in WTI, while investors turned to Brent due to Middle East supply concerns.
Meanwhile, speculators increased their net long positions on Brent futures, wagering that the Gaza situation would worsen. According to reports, since December 2016, Brent buying reached its highest level in nearly seven years since the initial OPEC and non-OPEC cooperation agreement.
Moreover, the WTI net decreased from 286 million barrels to 183 million in the past three weeks. On the other hand, Brent increased by 227 million barrels from its previous 153 million barrels.
Analysts anticipate de-escalation in the Gaza-Israel conflict will help alleviate recent market volatility.
