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Oil prices broadly stable

Oil prices broadly stable with uncertainty around Middle East and US election

On Thursday, oil prices broadly stable amid ongoing uncertainties related to conflicts in the Middle East and reports indicating that North Korean troops may be poised to assist Russia in Ukraine, keeping traders cautious as the U.S. presidential election approaches.

By 1318 GMT, Brent crude futures had increased by 46 cents, or 0.6%, reaching $75.42 per barrel, while U.S. West Texas Intermediate crude futures rose by 39 cents, also a 0.6% gain, to settle at $71.16.

This week, oil prices have risen approximately 3% following a decline of over 7% the previous week, attributed to a perceived de-escalation of tensions in the Middle East, alongside concerns regarding oversupply and sluggish demand.

Tamas Varga, an analyst at oil brokerage PVM, noted, “The interplay of economic uncertainty, a loose oil supply landscape, and potential disruptions related to conflict will likely prevent a definitive trend in oil prices in the near term, with medium-term risks leaning towards a downward trajectory.”

On Wednesday, the U.S. government reported evidence suggesting that North Korea has dispatched 3,000 troops to Russia, potentially for deployment in Ukraine, a development that could significantly intensify Russia’s conflict with Ukraine.

Intensifying Hostilities

In the Middle East, intensified hostilities between Israel and Hezbollah raised concerns regarding supply disruptions, while airstrikes carried out by Israel reportedly targeted the Syrian capital, Damascus, early Thursday.

Simultaneously, Washington is actively advocating for a resolution between Israel and Iranian-backed factions, including Hezbollah and Hamas, ahead of the U.S. presidential election on November 5, an event that could influence American foreign policy in the region as well as oil market dynamics.

Kelvin Wong, a senior market analyst at OANDA, observed, “Current betting market data indicates that Trump is leading over Kamala Harris, with Trump suggesting the U.S. could become a significant oil supplier. Such a policy shift could exert downward pressure on prices.” While betting markets favor Trump, alternative polling indicates that the election results remain highly competitive and uncertain.

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Source: Oil & Gas 360

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Oil rose 1.4% after three weeks of declines set the stage for a relief rally. West Texas Intermediate settled above $78 a barrel Monday.

Oil stages relief rally after three straight weekly declines

Oil rose 1.4% after three weeks of declines setting the oil stages relief rally.

Oil prices experienced a notable recovery, surging by 1.4%, following a string of three consecutive weeks of declines. This upward movement in prices has sparked a sense of relief among market participants who have been closely monitoring the volatility in the oil market. The recent decline in oil prices had raised concerns and uncertainties about the future direction of the market, making this relief rally a welcomed development.

The three-week decline in oil prices was primarily driven by a combination of factors, including concerns over global economic growth, the ongoing trade tensions between major economies, and fears of a potential oversupply in the market. These factors had created a bearish sentiment, leading to a downward pressure on oil prices. However, the recent rally suggests that market sentiment is shifting, as investors are hopeful that the worst of the decline may be behind us.

The Positive sentiment in global equity markets

It is worth noting that the relief rally in oil prices is also supported by broader market dynamics. The positive sentiment in global equity markets, driven by a series of positive economic data and central bank stimulus measures, has contributed to the rebound in oil prices. Additionally, recent geopolitical developments, such as the easing of tensions in certain key regions, have also played a role in boosting investor confidence in the oil market.

Looking ahead, market participants will closely monitor key factors that could impact the future trajectory of oil prices. The ongoing trade negotiations between the United States and China, as well as developments in major oil-producing nations like Saudi Arabia and Russia, will be closely watched for any potential impact on oil supply and demand dynamics. Furthermore, any shifts in global economic growth expectations could also have a significant influence on oil prices.

Following three weeks of declines has provided a sense of relief for market participants. The rally supports positive sentiment in global equity markets, and geopolitical developments. There are hopes of a resolution to key trade tensions. However, the future direction of oil prices remains uncertain. This is as investors continue to monitor various factors that could influence market dynamics.

Weakening Demand Outlook

West Texas Intermediate settled above $78 a barrel Monday, snapping a rout that saw oil plummet more than 13%. A weakening demand outlook and rising US supplies continue to weigh on the market. With that, technical signals suggest the recent sell-off was overdone. Moreover, OPEC on Monday reiterated its view that global supply balances are tight and consumption healthy. As a result, this will be supporting prices alongside a weaker dollar.

“The futures market appears oversold,” RBC Capital Markets analysts including Michael Tran wrote in a note. Yet he cautioned that this rally may be short-lived. This is with investors persistently on edge about demand given stubbornly high US interest rates.

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Source: Bloomberg

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Escalation of Israel-Hamas war into Middle East-wide conflict would disrupt oil supplies and stoke food prices, says World Bank

World Bank warns oil price could soar to record $150 a barrel

World Bank Oil Price

World Bank warns oil price could soar to a record high of more than $150 a barrel if the war between Israel and Hamas leads to a repeat of the full-scale conflict in the Middle East witnessed 50 years ago, the World Bank has warned.

In the first major assessment of the economic risks of an escalation of the war beyond Gaza’s borders, the World Bank said there was a risk of the cost of crude entering “uncharted waters”.

A “large disruption” scenario comparable with the Arab oil boycott of the west in 1973 would create supply shortages that would lead to the price of a barrel of oil increasing from about $90 to between $140 and 157. The previous record – unadjusted for inflation – was $147 a barrel in 2008.

World Bank Oil Price

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Source: The Guardian

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