Crude-oil futures moved lower on Thursday following their first gain in four sessions, with prices still volatile as traders eyed the latest developments in the Middle East for any signs of growing risks to the market in the oil-rich region.
Prices moved away from the session lows, but held onto a loss from Wednesday’s settlement after a fresh reading on the strength of U.S. economic growth.
Price action
-
West Texas Intermediate crude oil
CL00,
-1.49% CL.1,
-1.49%
for December delivery was down $1.37, or 1.6%, at $84.02 a barrel on the New York Mercantile Exchange. -
December Brent crude
BRN00,
-1.25% ,
the international benchmark, was down $1.52, or 1.7%, to $88.61 a barrel on ICE Futures Europe. -
November gasoline
RBX23,
-0.27%
fell 0.8% to $2.2666 per gallon, while November heating oil
HOX23,
+0.26%
was up 0.2% at $3.0355 a gallon. -
November natural gas
NGX23,
+1.30%
gained 1.5% to $3.054 per million British thermal units.
Market drivers
“Fundamentals for oil are taking a back seat to the shifting winds of war,” said Phil Flynn, senior market analyst at The Price Futures Group, in a daily note. “It’s war premium in, then war premium out, then war premium back in again.”
Israeli troops briefly raided northern Gaza overnight ahead of a widely expected ground invasion, the Associated Press reported.
“Oil bears were back in action on Thursday as a mashup of demand-side fears and concerns over the economic outlook weighed on the global commodity,” Lukman Otunuga, manager, market analysis, at FXTM told MarketWatch.
Oil prices have been moving lower following the release of Wednesday’s supply data from the U.S. Energy Information Administration, which reflected larger-than-expected increases in domestic crude and gasoline supplies.
The weekly rise in U.S crude stockpiles reported Wednesday, “coupled with the absence of any immediate supply disruptions in the Middle East has offered sellers an opportunity to attack,” said Otunuga.
Oil managed to trade off the session’s lows some after U.S. third-quarter gross domestic product data showed the economy expanded by a stronger-than-expected 4.9%. Economists expected a growth rate of 4.7%, according to a poll conducted by The Wall Street Journal.
“Looks like consumers went on a spending spree but can it last?” Flynn told MarketWatch.
“Concerns about a potential slowdown in the economy ahead as well as weak seasonal demand for oil is weighing on prices,” he said. “The market also seems to be really getting kicked around by war rumors and the uncertainty seems to be dragging a bit on the global economy.”
The conflict between Israel and Hamas could help to limit any further declines in oil, as speculators remain ready to jump in and buy due in part to the geopolitical uncertainty.
“On one hand you have an uncertain economic background which means weak demand compared to the supply available. On the other you have fears that supply could easily be interrupted should there be an escalation in hostilities across the Middle East. While oil appears to be trading in a minor downtrend, any downside ‘overshoots’ are being jumped on by bullish speculators,” said David Morrison, senior market analyst at Trade Nation.
In other energy trading Thursday, prices for natural gas extended early gains after the EIA reported that U.S. natural-gas supplies in storage rose by 74 billion cubic feet for the week ended Oct. 20.
On average, analysts surveyed by S&P Global Commodity Insights forecast an increase of 81 billion cubic feet.
This story originally appeared on Marketwatch
