Oct 24 2024: Oil prices rose about 1% on Thursday, recovering some of the losses from the previous session, as escalating tensions in the Middle East kept supply concerns in focus. The market also looked ahead to the U.S. presidential election and anticipated strong demand for distillates in the fourth quarter.
By 06:55 GMT, Brent crude futures increased by 77 cents, or 1%, to $75.73 per barrel, while U.S. West Texas Intermediate (WTI) crude futures gained 82 cents, or 1.2%, to $71.59. The rise came as an exchange of heavy fire between Israel and Hezbollah further intensified supply concerns.
Oil prices have surged nearly 4% this week, bouncing back from last week’s steep losses of over 7%.
Independent market analyst Tina Teng noted that last week’s sell-off, triggered by fears of weak demand and oversupply, might have been an overreaction, while the ongoing Middle East conflict continues to influence the market.
Early on Thursday, Israeli airstrikes targeted the Syrian capital, Damascus, as part of the wider conflict in Gaza, according to Syrian state media. This followed Israeli strikes on southern Beirut and missile attacks by Hezbollah on Israeli targets.
The escalation comes as Washington ramps up its final diplomatic push for peace between Israel and Iran-backed Hezbollah and Hamas ahead of the U.S. presidential election on November 5, which could impact U.S. Middle East policy.
Priyanka Sachdeva, senior market analyst at Phillip Nova, warned that market volatility could increase in the lead-up to the election, which will coincide with the Federal Reserve’s November interest rate decision.
Some analysts believe a victory for former U.S. President Donald Trump could weigh on oil prices if he implements policies to increase U.S. oil production, adding to already ample global supplies.
“Further potential price increases may be limited by the U.S. presidential election, where Trump is currently leading over Harris in betting markets and has proposed making the U.S. a major oil supplier,” said Kelvin Wong, senior market analyst at OANDA.
While betting markets give Trump a slight edge, other polls suggest the race is too close to call.
On the demand side, analysts at JP Morgan pointed to stronger-than-expected demand for distillates, particularly in Asia, with consistent stock drawdowns in key markets. They added that distillate demand in the fourth quarter could exceed previous forecasts.
