Oil erased a drop after OPEC+ leaders Saudi Arabia and Russia reaffirmed their close cooperation in the crude market with a public show of unity, and traders monitored events in Israel and Gaza.
(Bloomberg) — Oil erased a drop after OPEC+ leaders Saudi Arabia and Russia reaffirmed their close cooperation in the crude market with a public show of unity, and traders monitored events in Israel and Gaza.
West Texas Intermediate edged above $84 a barrel aided by gains in wider financial markets before key US inflation data. Prices rallied despite an International Energy Agency report that said oil’s retreat from close to $100 a barrel shows that demand in some regions was being destroyed.
Speaking in a joint interview on Russian state TV, Saudi Energy Minister Prince Abdulaziz bin Salman said producers will continue to act preemptively. Russia’s Deputy Prime Minister Alexander Novak, meanwhile, said the market balance was fragile. That’s against the backdrop of Israeli military forces continuing to amass along the border of the Gaza Strip ahead of an expected ground assault into the enclave in a bid to wipe out Hamas following the group’s attacks last weekend.
Oil has had a volatile ride this week following the initial shock of the Hamas assault, with traders seeking to price in the potential repercussions. There are concerns that the conflict may spread across the region, endangering crude flows. In addition, prices have swung on data showing record-high US production, and the possibility of a deal between the US and Venezuela that may boost crude flows.
“The conflict seems to evolve along the usual geopolitical playbook,” said Norbert Ruecker, an analyst at Julius Baer. “The shock temporarily lifts prices until uncertainty ebbs again, and the oil market returns to its previous state.”
Saudi Arabia and Russia have spearheaded deep output cuts this year in a bid to drain inventories and boost prices, with their voluntary curbs augmenting a broader collective OPEC+ deal to pare production. The restrictions underpinned a major rally in the third quarter, with Brent nearing $100 a barrel.
US inventory levels will also be in focus today after the industry-funded American Petroleum Institute reported a jump of almost 13 million barrels in nationwide stockpiles. However, inventories at the Cushing, Oklahoma, hub dropped back toward critically low levels. Official figures are due later on Thursday.
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