Price action
- West Texas Intermediate crude for November delivery CL.1, -0.11% CLX23, -0.11% was up 2 cents at $87.71 a barrel on the New York Mercantile Exchange.
- December Brent crude BRN00, -0.26% BRNZ23, -0.26%, the global benchmark, was off 19 cents at $90.71 a barrel on ICE Futures Europe.
Market drivers
Oil prices rose sharply on Friday as traders were cautious ahead of the weekend due to Israel’s anticipated ground incursion into Gaza. Concerns about a potential Iran involvement and the consequent threat to supplies from the Middle East led traders to rebuild a risk premium. Although the initial spike from last Monday was mostly erased in subsequent sessions, oil prices remained elevated.
However, despite the bounce, crude oil did not reach the highs set in September 2023.
Analysts at Sevens Report Research commented, “Aside from the influence of geopolitics, oil market fundamentals were mixed. U.S. production reached a new record high, which is bearish, but consumer demand rebounded, and economic data indicated a resilient labor market. Both of these factors support the case for higher prices.”
Looking ahead, the analysts noted that as long as the war between Israel and Hamas continues, there will be a geopolitical fear bid in the market. The region’s oil infrastructure will face an elevated threat of being targeted.
