Oil futures bounced back on Friday after a sharp decline in the previous session. However, the market remains on track for monthly losses due to concerns over the Israel-Hamas conflict affecting crude supplies.

Price Action

  • West Texas Intermediate (WTI) crude for December delivery rose by 0.5% to $82.76 a barrel on the New York Mercantile Exchange. This marks an October drop of 8.8%.
  • December Brent crude, the global benchmark, gained 0.6% to $88 a barrel. January Brent, the most actively traded contract, was up 0.5% at $86.79 a barrel, resulting in a 5.9% monthly decline.
  • November gasoline rose by 0.5% to $2.231 a gallon, while November heating oil increased by 1.2% to $3.002 a gallon. Both are experiencing monthly drops of 7% and 9.1%, respectively.
  • December natural gas gained 1.6% to $3.406 per million British thermal units, with a monthly gain of 2.8%.

Market Drivers

The gains made in WTI and Brent since the start of the Israel-Hamas war have been largely erased. The risk of a broader conflict remains, but the focus is primarily on Iranian oil flows.

There is a concern that more stringent enforcement of sanctions by the United States could result in up to 1 million barrels a day of Iranian crude being taken off the market. However, so far, there have been no disruptions to oil supply from the region.

Analysts from ING highlight that without significant supply disruptions, it is unlikely that there will be a sustained increase in oil prices.

In conclusion, while oil futures have recovered slightly, the market is still expected to see monthly losses due to ongoing geopolitical concerns.

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