Oil prices rise, set for steep weekly loss as Middle East fears ease
2023.10.26 21:23
© Reuters.
Investing.com– Oil prices rose in Asian trade on Friday, but were nursing bruising losses for the week as traders priced in a lower risk premium from the Israel-Hamas war, while rising Treasury yields and weak economic data also fueled demand concerns.
Signs of a potential deescalation in the war saw traders dialing down bets that it will draw in other Middle Eastern countries and disrupt oil supplies in the crude-rich region.
Several diplomatic missions to Israel were working to prevent a planned ground assault on Gaza and negotiate the return of about 200 hostages held by Hamas.
Still, Israeli forces carried out an overnight raid on northern Gaza, while Prime Minister Benjamin Netanyahu reiterated his commitment to a bigger ground assault on the region.
But traders struggled to gauge just how much the war would disrupt oil supplies, given that crude shipments from the Middle East were little changed in the first 20 days of the conflict.
rose 0.5% to $88.42 a barrel, while rose 0.6% to $83.68 a barrel by 20:49 ET (00:49 GMT). Both contracts plummeted about $2 a barrel on Thursday, and were set to lose between 4% to 5% this week- their first weekly loss in three.
Fed uncertainty, mixed economic signals keep oil markets on edge
Strength in the , before a next week, also put some pressure on oil markets. While the central bank is widely expected to keep rates on hold, Fed officials have also signaled higher-for-longer rates, which could potentially stymie crude demand in the coming year.
Treasury yields soared in anticipation of the Fed meeting, also unsettling markets.
Still, released on Thursday showed that the U.S. economy grew far more than expected in the third quarter, pushing up hopes that oil demand in the world’s largest fuel consumer will remain steady in the coming months.
But this was preceded by a string of weak economic readings from the euro zone, as slowing business activity primed the bloc for a recession this year.
Weak signals on oil demand in China also weighed, as Beijing proposed a cap on domestic oil refining to curb carbon emissions. This largely offset news of more stimulus measures in the country.
