Oil Prices Rise for the Third Consecutive Day
Oil prices have been on an upward trajectory, marking a third straight session of gains. On Thursday, futures climbed by 83 cents, or 1.06%, reaching $79.16 a barrel. Similarly, U.S. West Texas Intermediate crude saw an increase of 96 cents, or 1.28%, settling at $76.19. This rise comes as recent U.S. jobs data alleviated some of the anxiety surrounding oil demand.
Influence of U.S. Jobs Data
The positive momentum in oil prices is partly attributed to the latest U.S. jobs data. The number of new unemployment benefit claims fell more steeply than anticipated last week, suggesting a robust labor market. Giovanni Staunovo, an analyst at UBS, noted that the strong job market indicates ongoing economic growth, which in turn reduces fears about declining oil demand.
Middle East Tensions and Oil Supply Concerns
Another significant factor affecting oil prices is the heightened tensions in the Middle East. Recent incidents, such as the killing of senior members of Hamas and Hezbollah, have raised fears of potential Iranian retaliation against Israel. This development has stoked concerns over possible disruptions in oil supply from this critical region.
Tim Snyder, chief economist at Matador Economics, emphasized that any large-scale Iranian retaliation could significantly impact crude oil prices. Additionally, an incident involving Houthi militants attacking international shipping near Yemen further contributed to the tense geopolitical climate.
Inventory Levels and Market Dynamics
Adding to the upward pressure on prices was the report from the Energy Information Administration, which revealed a 3.7 million barrel drop in inventories last week. This decline surpassed analysts' expectations, marking the sixth consecutive week of decreasing inventories, reaching six-month lows.
Geopolitical and Weather-Related Risks
The market remains sensitive to various risks, including geopolitical tensions in North Africa and the Middle East, and potential weather-related disruptions during the hurricane season. Analysts at Citi suggest that these factors could push Brent oil prices into the low-to-mid $80s range.
Citi analysts highlighted that the market's tight balances, coupled with reduced managed money positioning, add to the upside risks. Meanwhile, Libya's National Oil Corp. has declared force majeure at its Sharara oilfield amid protests, potentially impacting production levels.
Investors continue to monitor these developments closely, as they could have significant implications for oil supply and pricing in the coming weeks.
