Oil Edges Higher With Focus on Israel-Hamas War, Shaky Demand

By Bloomberg

Nov 01, 2023

image is BloomburgMedia_S3DW2AT1UM0W01_01-11-2023_05-15-41_638343936000000000.jpg

An oil refinery, operated by Bharat Petroleum Corp. Ltd., in Mumbai, India, on Saturday, Dec. 10, 2022. A senior official at India's oil ministry told reporters this month India has been buying oil from about 30 countries, and will continue to buy from anywhere including Russia beyond January. Photographer: Dhiraj Singh/Bloomberg

(Bloomberg) -- Oil advanced after slumping in the first two days of the week, as a still-contained Israel-Hamas war caused attention to shift to global demand.

Global benchmark Brent traded above $85 a barrel, near where it was prior to the Oct. 7 Hamas attack on Israel, while West Texas Intermediate was near $81. Israeli forces continued moving gradually into the Gaza Strip, with the army reporting its first casualties since the start of the land assault.

US Secretary of State Antony Blinken will head back to Israel on Friday and make other stops in the region as part of diplomatic efforts that have so far helped stop the conflict from spreading across the Middle East.

Away from the war, there’s evidence the demand outlook is wavering, with both Brent and WTI posting their first monthly declines since May. Manufacturing in China, the world’s biggest oil importer, fell back into contraction in October, while BP Plc said global gasoline and diesel markets are oversupplied.

Brent has snapped four straight months of gains to end more than 8% lower in October, as demand concerns overshadowed the Israel-Hamas conflict. Fears of supply or transport disruptions in a region that’s the source of around a third of the world’s crude have eased as the war remained contained.

“The geopolitical risk premium to oil is fading, which means the oil market’s focus is likely to return to global demand and supply factors,” said Han Zhong Liang, investment strategist with Standard Chartered Plc. Near-term tightness in oil markets is likely to give way to demand destruction in the longer run, with prices likely to trend lower, he said.

The industry-funded American Petroleum Institute said US crude stockpiles rose by 1.35 million barrels last week, according to a person familiar with the data. There was also a modest build at the Cushing, Oklahoma, storage hub. AlphaBBL also reported an expansion of inventories at Cushing. Official data is due later Wednesday.

By Yongchang Chin