Oil rebounded with traders focused on Middle East tensions and tightening US crude stockpiles.
West Texas Intermediate advanced 2.1% to settle near $69 a barrel after tumbling over the previous two sessions. Brent settled above $72, climbing 2%. While one Israeli minister suggested that the war with Hezbollah could be over by year-end, the country’s military chief vowed to strike Iran “very hard” should the OPEC producer launch another attack.
“We think the oil market has relaxed too quickly,” Standard Chartered analysts including Emily Ashford said in a note. “We see the risk of an escalating series of attacks over an extended period, with no immediate prospect of either military or diplomatic resolution.”
Also supporting prices was a government report showing US crude inventories shrank by 515,000 barrels last week. While that was a smaller drop than projected by an industry group, it was more bullish than Bloomberg users’ estimate of an 871,000-barrel increase. US gasoline and distillate inventories also fell.
Looking ahead, all eyes are on OPEC+’s plans to gradually revive production from December, with traders split on whether the alliance will press ahead. Reuters reported that OPEC+ nations could delay plans to revive oil production in December, citing unidentified sources.
Commodity and financial markets are also gearing up for two crucial events next week — the US election and a meeting of China’s top legislative body, with investors watching for any additional stimulus efforts to revive the economy. The Asian nation is the world’s biggest crude importer.
