Oil prices steady after wild swings, but set for second week of losses

Investing.com– Oil prices steadied in Asian trade on Friday after a weakened dollar and easing concerns over the Israel-Hamas war spurred wild swings over the prior sessions, although they were still set to close lower for a second straight week.

Crude prices saw some strength this week after the stood pat on interest rates and offered somewhat dovish signals to the market, which in turn weighed on the dollar and triggered a rally in commodity prices. Oil prices surged over 3% on Thursday. 

Dovish signals from the and the also offered some support.

But this was largely offset by declining concerns over the Israel-Hamas war, particularly that it would result in any meaningful disruptions in Middle-Eastern oil supplies. 

rose 0.1% to $86.85 a barrel, while rose 0.1% to $86.85 a barrel by 20:47 ET (00:47 GMT).

Oil heads for second week in red as Israel-Hamas fears subside

Both major crude contracts were set to lose between 3.5% and 4% for the week- their second consecutive week in red.

Pressure on oil came chiefly from a lack of escalation in the Israel-Hamas war, as other Arab states appeared to show no inclination of joining the conflict directly. 

Israel was still carrying out a major ground assault on Gaza, while world powers attempted to broker a cease-fire to get some humanitarian aid into the war-torn region.

Iran also called for an oil supply embargo against Israel, although other members of the Organization of Petroleum Exporting Countries made no such moves. 

Weak economic data from China also weighed on crude, as purchasing managers index readings showed that in the world’s largest oil importer unexpectedly shrank in October.

Fed pauses, but nonfarm payrolls present another test 

Oil prices rallied from one-month lows on Thursday after the Fed kept rates steady, and offered a seemingly dovish outlook on future rate hikes. A sharp decline in the dollar, after the Fed’s comments, was a key point of support for crude markets.

But future rate hikes will still be contingent on the path of inflation, the labor market and the U.S. economy. On that front, markets are now awaiting key data for October, due later in the day. 

The reading is expected to show a sharp decline in payrolls, indicating a cooler jobs market. But the data has also surpassed expectations for six of the nine months so far this year. 

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