Oil Jumps With Middle East Tension Keeping Traders on Edge
(Bloomberg) -- Oil surged, snapping a two-day decline, as the market awaited Israel’s response to Iran’s missile attack.
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West Texas Intermediate rose more than 3% to settle near $76 a barrel. Israel’s security cabinet plans to meet Thursday evening to discuss how to retaliate against Iran. On Wednesday, Israeli Defense Minister Yoav Gallant said the nation’s response “will be deadly, precise and above all surprising,” while Iran has warned it’s ready to launch thousands of missiles if needed.
“As we head into the weekend, crude oil is likely to remain choppy as the market struggles to price in potential developments,” said Rebecca Babin, senior energy trader at CIBC Private Wealth Group. “Traders are trigger happy and largely in a wait-and-see mode, with little conviction in either direction due to the high levels of uncertainty.”
Geopolitical concerns have sent volatility soaring and prompted hedge funds to add more net-long positions. President Joe Biden has discouraged an attack on Iranian oil infrastructure, and spoke with Israeli Prime Minister Benjamin Netanyahu on Wednesday for the first time in over a month. But the call threw into focus the US leader’s limited ability to influence Israel’s prime minister.
Still, concerns over China’s economy continue to linger, and the lack of fresh major stimulus from Beijing this week prompted a broad market selloff on Tuesday, including in oil. The central government said it would hold a new briefing on fiscal policy on Saturday.
Meanwhile in the US, crude stockpiles swelled by 5.8 million barrels last week, the biggest increase since late April, according to government data released Wednesday. Gasoline inventories dropped.
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--With assistance from Devika Krishna Kumar.
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