Oil set for 3% weekly gain on rising Middle East tension, better US outlook

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Oil prices edged up in Asian trade on Friday, heading for a weekly gain of more than 3 per cent, as US jobs data calmed demand concerns and fears of a widening Middle East conflict persisted.

Brent crude futures rose 9 cents, or 0.11 per cent, to $79.25 a barrel by 0406 GMT. US West Texas Intermediate crude futures were up 12 cents at $76.31 per barrel.

Both Brent and WTI were set to gain more than 3 per cent on a weekly basis.

“Crude oil continued its recovery from its recent plunge as elevated geopolitical risks came into focus,” said ANZ analyst Daniel Hynes.

Tensions in the Middle East

Tensions between Israel, Iran and Lebanon-based Hezbollah grew, stoking concerns over oil supply from the world’s largest producing region.

Houthis in Yemen continued attacks this week on international shipping near the Gulf of Aden, in solidarity with Palestinians in Gaza.

On Thursday, the United Kingdom Maritime Trade Operations (UKMTO) agency said it had received a report of an incident near the coast of Mokha, a port city in Yemen.

UKMTO WARNING INCIDENT 106 ATTACK UPDATE 002 https://t.co/auxAKdReZU#MaritimeSecurity #MarSec pic.twitter.com/4GsdoeRpdn

— United Kingdom Maritime Trade Operations (UKMTO) (@UK_MTO) August 9, 2024

Lending further support to prices, Libya’s National Oil Corporation declared force majeure at its Sharara oilfield from Wednesday, the company said in a statement, adding that it had gradually reduced the field’s output because of protests.

Also in the Middle East, the king of Saudi Arabia, the world’s largest oil exporter, decreed that the cabinet could convene in the absence of himself and the prime minister, his son Crown Prince Mohammed bin Salman, state media said on Thursday.

The 88-year-old King Salman was treated for lung inflammation in May.

US economy

Sentiment in the US was buoyed after data showed the number of Americans filing new applications for unemployment benefits fell more than expected last week, suggesting fears that the labor market was unraveling were overblown and easing recession concerns.

The dollar rose on the jobs data. A stronger dollar usually tends to lower oil prices, however, as buyers using other currencies have to pay more for their dollar-denominated crude.

In China, July consumer price index figures showed no sign of a pick-up in consumer demand, despite consumption-boosting incentives.

Prices rose last month at a rate slightly faster than expected, Friday’s data showed, but that was largely because of weather disruptions that affected food supplies.

Markets in key oil trading hub Singapore were closed for a public holiday.

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