Oil Steadies After Notching Biggest Weekly Advance Since April

(Bloomberg) -- Oil steadied following its biggest weekly gain since April as strength in the dollar offset fears that the conflict between Israel and Hezbollah could morph into a regional war.

Brent traded little changed, while West Texas Intermediate was near $71 a barrel. The dollar crept higher, making commodities priced in the currency less appealing and helping crude erase an earlier increase.

Hezbollah launched more than 100 rockets, missiles and drones toward northern Israel on Sunday, prompting counterattacks against the Iran-backed group in Lebanon. Concerns persist that the war will worsen, threatening oil output in a region that supplies about a third of the world’s barrels.

In China, the largest oil-importing nation, authorities announced plans for a rare briefing on the economy by financial regulators as the country cut a short-term policy rate. That fueled speculation officials are preparing more efforts to revive growth, after the US pivoted to lowering borrowing costs last week.

Optimism around US rate cuts has driven a 9% rally in Brent since it sank earlier this month. However, concerns of a worsening fuel demand outlook, which made hedge funds the most bearish on diesel on record, have kept gains in check. 

“Crude may go into a holding pattern for a bit, consolidating last week’s gains,” said Vandana Hari, the founder of Vanda Insights in Singapore, “Market cheer from the jumbo Fed cut is keeping sentiment aloft. But at some point, we could see crude under renewed downward pressure as the Fed glow fades and oil market attention returns to the souring demand picture.”

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