A person puts gas in a vehicle at a gas station in Manhattan, New York City, U.S., August 11, 2022. REUTERS/Andrew Kelly/File Photo Acquire Licensing Rights
BENGALURU, Oct 20 (Reuters) – Oil prices rose on Friday as investors worried about potential supply disruptions in the Middle East, one of the world’s top-producing regions, after signs of escalation of the Israel-Palestinian crisis.
Brent crude futures rose 70 cents, or 0.8%, to $93.08 a barrel by 12:51 p.m. EDT (1651 GMT). U.S. West Texas Intermediate crude futures for November delivery , which expire on Friday, climbed 60 cents, or 0.7%, to $89.97 a barrel.
The more active December WTI contract was up 61 cents at $88.96 a barrel.
Both front-month contracts were headed for a second weekly gain on heightened fears of the Middle East conflict spreading.
“The Middle East remains a big focus of the market because of fears of a region-wide conflict that would likely involve a disruption of oil supplies,” said John Kilduff, a partner at New York-based Again Capital.
Supply disruptions “may be a remote possibility” now, Kilduff added, but “the market cannot ignore it – especially heading into the weekend when things could change rapidly and there will be no trading.”
On Thursday, Israeli Defence Minister Yoav Gallant told troops at the Gaza border they would soon see the Palestinian enclave “from inside”, suggesting an expected ground invasion could be near. Also on Thursday, the Pentagon said the U.S. had intercepted missiles fired from Yemen toward Israel.
Oil prices are also supported by forecasts of a tightening market in the fourth quarter after top producers Saudi Arabia and Russia extended supply cuts to year end.
Large inventory draws, mostly in the U.S., also support the thesis of an undersupplied market, UBS analyst Giovanni Staunovo said.
In the near-term, oil prices are likely to stay volatile with geopolitical risks driving the market, Staunovo said. UBS expects Brent prices to trade in the $90 to $100 a barrel range over the coming sessions, he added.
Washington’s renewed efforts to refill the U.S. Strategic Petroleum Reserve have been slightly supportive for oil prices, although the Department of Energy’s bid to buy oil at $79 a barrel or lower is unlikely to attract strong interest, analysts said.
“When you try to put a bid basically $20 below the market, I wouldn’t expect a fast execution of that trade,” said Phil Flynn, analyst at Price Futures Group.
Separately, a temporary lifting of U.S. oil sanctions on OPEC member Venezuela is unlikely to require any policy changes by the OPEC+ producer group for now, as a recovery in production is likely to be gradual, OPEC+ sources told Reuters.
Reporting by Shariq Khan; Additional reporting by Paul Carsten, Florence Tan and Sudarshan Varadhan; editing by Shri Navaratnam, Jason Neely, David Gregorio and Jane Merriman
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