Market Analysis

Image Credit: Reuters

Oil prices edged higher on Friday and are set to post a weekly gain of over 1% as traders remained cautious amid ongoing tensions in the Middle East and upcoming Gaza ceasefire discussions.

Brent crude futures rose by 31 cents, or 0.4%, to $74.69 per barrel by 0642 GMT, while U.S. West Texas Intermediate crude was up 29 cents, or 0.4%, to $70.48 per barrel.

IG market analyst Tony Sycamore noted that the current crude price of around $70 reflects the market’s wait-and-see approach, with new influences potentially emerging, such as the outcome of China’s NPC Standing Committee meeting and Israel's response to Iran’s October 1 missile attack.

On Thursday, both Brent and WTI had dropped 58 cents a barrel amid fluctuating expectations over the Middle Eastern situation. Oil traders await Israel's potential response to the Iranian missile strike, which might target Iranian military rather than nuclear or oil sites, reducing the risk of disrupting oil supply.

U.S. and Israeli officials plan to resume Gaza ceasefire and hostage-release talks soon, though prior efforts have not succeeded. U.S. Secretary of State Antony Blinken said Thursday that the U.S. opposes a prolonged Israeli campaign in Lebanon, while France called for diplomacy and a ceasefire. Sycamore observed that such ceasefire efforts tend to have a slight downward effect on oil prices, with greater focus on Lebanon-Israel tensions and Israel's stance toward Iran.

Investors are also awaiting details on China’s economic stimulus efforts, though analysts do not expect significant impacts on China’s oil demand. Goldman Sachs maintained its oil, natural gas, and coal price outlook, suggesting that Chinese stimulus would have a minor influence on energy prices compared to key drivers like Middle Eastern oil supply and winter weather effects on natural gas demand.

Paraphrasing text from "Reuters" all rights reserved by the original author.