Commodities
Oil spikes as Middle East strife heightens supply concerns
© Reuters. FILE PHOTO: Crude oil storage tanks are seen from above at the Cushing oil hub, appearing to run out of space to contain a historic supply glut that has hammered prices, in Cushing, Oklahoma, March 24, 2016. REUTERS/Nick Oxford//File Photo
By Natalie Grover
LONDON (Reuters) -Global oil benchmark Brent hit $93 a barrel on Wednesday as the risk of escalating conflict in the Middle East threatened to disrupt oil supplies from the region, with Iran calling for an oil embargo to be imposed on Israel.
Brent crude futures were up $1.33, or about 1.5%, to $91.23 a barrel at 1231 GMT. West Texas Intermediate crude (WTI) futures were up $1.28, or roughly 1.5%, at $87.94 a barrel.
Both benchmarks gained more than $3 to touch their highest levels in two weeks earlier in the session.
Markets factored in risk premiums after hundreds of Palestinians were killed in a blast at a Gaza City hospital on Tuesday that Israeli and Palestinian officials blamed on each other.
Jordan then cancelled a summit it was to host with U.S. President Joe Biden and Egyptian and Palestinian leaders. Biden arrived in Israel on Wednesday pledging solidarity in its war against Hamas, and backing its account that the Gaza hospital blast had been caused by militants.
“This turn of diplomatic fortunes again garners fear of conflict spread and therefore the leap in oil,” said John Evans of oil broker PVM.
Elsewhere in the Saudi city of Jeddah, Iranian Foreign Minister Hossein Amirabdollahian urged members of the Organisation of Islamic Cooperation to impose an oil embargo on Israel.
OPEC+ is not planning to take any immediate action on Iran’s call, two sources from the producer group told Reuters.
“A long occupation looms as the scenario that pushes above $US100/bbl because it raises the risk that the Israel Hamas conflict expands and potentially draws in Iran directly,” added Vivek Dhar, an analyst at Commonwealth Bank of Australia (OTC:).
Geopolitical tensions aside, other drivers are also supporting oil prices.
stocks fell by a much-steeper-than-expected 4.4 million barrels in the week ended Oct. 13, compared to the forecast of a 300,000 barrel fall, according to market sources citing American Petroleum Institute figures on Tuesday. [API/S]
Official U.S. government data is due later on Wednesday.
On the demand side, China’s economy grew faster-than- expected in the third quarter, official data on Wednesday showed, suggesting a recent flurry of policy measures is helping to bolster a tentative recovery.
Data also showed that the country’s oil refinery throughput in September hit a record daily rate, up 12% from a year earlier, as refiners increased run rates to cater for strong demand for transport fuel over the Golden Week holiday and improving manufacturing activity.
But analysts sounded caution on China’s economy, with the country’s real estate sector still in peril.
“The economic recovery is still in its infancy,” Moody’s (NYSE:) Analytics economist Harry Murphy Cruise said.
Meanwhile, higher-than-expected September U.S. retail sales spurred expectations of another interest rate hike by year-end. Interest rate hikes to curb inflation can slow economic growth and reduce oil demand.
By Robert Harvey
LONDON (Reuters) -Oil futures jumped by almost 1% on Monday as a potential hurricane approaching the U.S. Gulf Coast helped oil prices to recover some of the previous week’s heavy losses.
rose 58 cents, or 0.82%, to $71.64 a barrel by 1125 GMT while West Texas Intermediate crude futures were up 61 cents, or 0.9%, at $68.28.
Prices of Brent crude had fallen in each of the past six trading sessions, retreating by more than 11%, or nearly $9 a barrel, to register the lowest closing price since December 2021 on Friday.
Analysts said Monday’s rebound was partly in response to a potential hurricane near the U.S. Gulf Coast while Libyan supply disruption has also been supporting prices.
Libya’s NOC late last week declared force majeure on several crude cargoes loading from the Es Sider port, with oil production curtailed by a political standoff over the central bank and oil revenue, four trading sources with knowledge of the matter told Reuters.
A weather system in the southwestern Gulf of Mexico is forecast to become a hurricane before it reaches the northwestern U.S. Gulf Coast, the U.S. National Hurricane Center said on Sunday. The U.S. Gulf Coast accounts for about 60% of U.S. refining capacity.
“A small recovery in prices is under way this morning, inspired by hurricane warnings that might threaten the U.S. Gulf Coast, but the wider conversation remains on where demand will come from and what OPEC+ can do,” said PVM analyst John Evans.
The OPEC+ oil producer group last week agreed to delay a planned output increase of 180,000 barrels per day for October by two months in reaction to tumbling crude prices
Trading houses Gunvor and Trafigura expect oil prices to range between $60 and $70 a barrel because of sluggish Chinese demand and persistent oversupply, executives told the APPEC conference in Singapore on Monday.
Meanwhile, Morgan Stanley cut its Brent price forecast for the fourth quarter to $75 a barrel from $80, adding that prices are likely to remain around that level unless demand weakens further.
The weakness in Chinese demand is driven by an economic slowdown and growing shift towards lower-carbon fuels, said speakers at the APPEC energy industry event.
Refining margins in Asia have slipped to their lowest seasonal levels since 2020.
A U.S. jobs report on Friday showed that August non-farm payrolls increased by less than market watchers had expected.
A decline in the jobless rate could slow the pace at which the Federal Reserve cuts interest rates, analysts said. Lower interest rates typically increase oil demand by spurring economic growth.
(Reuters) – Goldman Sachs adjusted its expectations for OPEC+ oil production saying it now expects three months of production increases starting from December instead of October, the bank said in a note on Friday.
OPEC+ has agreed to delay a planned oil output increase for October and November, the producers group said on Thursday after crude prices hit their lowest in nine months, adding it could further pause or reverse the hikes if needed.
However Goldman Sachs maintained its range of $70-85 per barrel and a December 2025 Brent forecast at $74 per barrel.
The investment bank expects the effects of a modest reduction in OPEC+ supply in the upcoming months to be counterbalanced by easing effects from the current softness in China’s demand and faster-than-expected recovery of Libya’s supply.
“We still see the risks to our $70-85 range as skewed to the downside given high spare capacity, and downside risks to demand from weakness in China and potential trade tensions,” Goldman Sachs said.
Brent crude futures were down $1.63, or 2.24%, to $71.06 a barrel on Friday, their lowest level since December 2021. U.S. West Texas Intermediate crude futures fell $1.48 on Friday, or 2.14%, to $67.67, their lowest since June 2023. [O/R]
Investing.com — Oil prices settled lower Friday, ending the week with a loss as weaker U.S. nonfarm payrolls stoked concerns about an economic-led slowdown in crude demand.
At 2:30 p.m. ET (1430 GMT), the futures (WTI) traded fell 2.1% to settle at $67.67 a barrel, while contract fell 2.2% to $71.06 per barrel.
U.S. economic slowdown worries resurface after weak jobs report
The US economy added fewer jobs than anticipated in August, but rose from a sharply revised July figure, according to Labor Department data that could factor into the Federal Reserve’s next policy decisions.
Nonfarm payrolls came in at 142,000 last month, up from a downwardly-revised mark of 89,000 in July. Economists had called for a reading of 164,000, up from the initial July mark of 114,000.
Following the release, bets that the Fed will introduce a deeper 50 basis-point rate cut — rather than a shallower 25 basis-point reduction — increased.
Concerns about the demand come just a day after OPEC+ said it had agreed to postpone a planned increase in oil production for October and November.
U.S., Europe working on Iran sanctions
Geopolitical tensions ratcheted up on Friday after the U.S. and Europe they were working on sanctions to impose on Iran after the Tehran sent missiles to Russia.
The U.S. had previously warned Iran about transferring missiles to Russia, saying it would represent a major escalation in Iran’s support of Russia’s war against Ukraine.
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