Wednesday saw a little increase in oil prices as traders pondered the possibility of supply disruptions brought on by the unrest in the Middle East.
By 0550 GMT, Brent crude had risen 25 cents, or 0.3%, to $87.90 per barrel. WTI crude for the United States increased by 24 cents, or 0.3%, to $86.21 a barrel.
As military clashes stoked concerns that the crisis would extend beyond Gaza, Brent and WTI rose by more than $3.50 on Monday. However, they stabilised down on Tuesday.
Although Israel produces a very small amount of crude oil, markets are concerned that the conflict may worsen and disrupt Middle Eastern supplies, aggravating an anticipated deficit for the remainder of the year.
"There is still a risk that this escalates, particularly if there is any Iranian involvement. Under this scenario, stronger enforcement of U.S. sanctions on Iranian oil would tighten up the oil market through 2024," said Warren Patterson and Ewa Manthey, analysts from ING bank, in a note to clients.
Although Iran has been accused by U.S. authorities of participating in the Hamas attack on Israel, there hasn't yet been any solid proof of this.
Crude prices have been prevented from falling further by political risk.
Israel claims that in reprisal for the Hamas attacks, it has destroyed portions of Gaza. Strong armed organisations in Yemen and Iraq that are allied with Iran have vowed to use drones and missiles to attack U.S. targets if Washington steps in to back Israel, which has kept markets on edge.
Leading oil producer Saudi Arabia stated on Tuesday that it is collaborating with local and global allies to stop the situation in Gaza and the surrounding territories from getting worse and reaffirmed its support for measures to stabilise oil markets.
"In the actual geopolitical context, crude oil could further rise toward the $90-$100 per barrel range but a rise beyond the $100 level is unlikely with the morose global economic outlook," said Ipek Ozkardeskaya, senior analyst at Swissquote Bank, in a note.
As the market awaited the release of the U.S. Federal Reserve's September policy meeting minutes later on Wednesday, the U.S. dollar index weakened to a two-week low of 105.78. A declining dollar makes petroleum less expensive for owners of other currencies, which could increase demand for oil.
In recent days, a number of Fed members have expressed the opinion that the U.S. central bank doesn't need to increase borrowing costs any further.
An improvement in negotiations between Venezuela and the U.S. may relieve Caracas of certain sanctions by allowing at least one more foreign oil company to purchase Venezuelan crude oil under certain restrictions.
(Source:www.brecoder.com)
By 0550 GMT, Brent crude had risen 25 cents, or 0.3%, to $87.90 per barrel. WTI crude for the United States increased by 24 cents, or 0.3%, to $86.21 a barrel.
As military clashes stoked concerns that the crisis would extend beyond Gaza, Brent and WTI rose by more than $3.50 on Monday. However, they stabilised down on Tuesday.
Although Israel produces a very small amount of crude oil, markets are concerned that the conflict may worsen and disrupt Middle Eastern supplies, aggravating an anticipated deficit for the remainder of the year.
"There is still a risk that this escalates, particularly if there is any Iranian involvement. Under this scenario, stronger enforcement of U.S. sanctions on Iranian oil would tighten up the oil market through 2024," said Warren Patterson and Ewa Manthey, analysts from ING bank, in a note to clients.
Although Iran has been accused by U.S. authorities of participating in the Hamas attack on Israel, there hasn't yet been any solid proof of this.
Crude prices have been prevented from falling further by political risk.
Israel claims that in reprisal for the Hamas attacks, it has destroyed portions of Gaza. Strong armed organisations in Yemen and Iraq that are allied with Iran have vowed to use drones and missiles to attack U.S. targets if Washington steps in to back Israel, which has kept markets on edge.
Leading oil producer Saudi Arabia stated on Tuesday that it is collaborating with local and global allies to stop the situation in Gaza and the surrounding territories from getting worse and reaffirmed its support for measures to stabilise oil markets.
"In the actual geopolitical context, crude oil could further rise toward the $90-$100 per barrel range but a rise beyond the $100 level is unlikely with the morose global economic outlook," said Ipek Ozkardeskaya, senior analyst at Swissquote Bank, in a note.
As the market awaited the release of the U.S. Federal Reserve's September policy meeting minutes later on Wednesday, the U.S. dollar index weakened to a two-week low of 105.78. A declining dollar makes petroleum less expensive for owners of other currencies, which could increase demand for oil.
In recent days, a number of Fed members have expressed the opinion that the U.S. central bank doesn't need to increase borrowing costs any further.
An improvement in negotiations between Venezuela and the U.S. may relieve Caracas of certain sanctions by allowing at least one more foreign oil company to purchase Venezuelan crude oil under certain restrictions.
(Source:www.brecoder.com)
