Oil Rebounds With Mideast Tension and Supply Outlook in Focus
In This Article:
(Bloomberg) -- Oil rebounded as traders continued to await a retaliatory Israeli strike on Iran, with the US pushing for a cease-fire in Gaza and Lebanon.
Most Read from Bloomberg
Brent rose above $76 a barrel, while West Texas Intermediate traded near $72. In the Middle East,
US Secretary of State Antony Blinken held talks with Saudi Crown Prince Mohammed bin Salman in Riyadh about efforts to reach a cease-fire in Gaza and Lebanon. He had earlier traveled to Israel, which has vowed to strike back against Tehran for a missile attack earlier this month.
The risk of Israeli retaliation has seen a deluge of activity in oil derivatives markets. Traders hold a record number of Brent options and contracts that hedge against a spike in prices are the most expensive relative to bearish ones since shortly after Russia’s invasion of Ukraine in 2022.
Oil has seen volatile trading this month as traders assess risks to output in the Middle East, which pumps about a third of global supplies, as well as a mixed picture on demand. While crude consumption has faltered in top importer China, even as authorities add stimulus, there have been stronger signals from the US, with refinery processing running at a six-year seasonal high. Investors are also counting down to next month’s close-fought US election.
“There appears to be a balancing act between the continuously uncertain geopolitical landscape and concerns over an oil surplus in 2025,” SEB analyst Ole Hvalbye wrote in a note. “It takes courage to maintain a short position in the current market.”
Crude was also aided on Thursday by firmer sentiment in wider markets. European equities and US futures were all pointing higher after a slew of positive earnings surprises.
To get Bloomberg’s Energy Daily newsletter into your inbox, click here.
Most Read from Bloomberg Businessweek
©2024 Bloomberg L.P.