Oil rose in New York on concern that the clash between Israel and Hamas may escalate into a wider conflict that would endanger Middle East crude exports.
West Texas Intermediate futures advanced as much as 1.3 percent, reversing earlier losses. Air-raid sirens sounded for a second day in Tel Aviv and an explosion was heard in the city as Israel extended its bombing of Gaza and militant groups fired rockets at the Jewish state. Egypt’s prime minister, Hisham Qandil, visited Gaza today and called for an international effort to end the violence.
“The weekend will carry some risk for oil markets,” said Olivier Jakob, managing director at Petromatrix GmbH, a researcher in Zug, Switzerland. “If Egypt is not able to stop Hamas from sending rockets then the conflict will definitively escalate, with a big question mark on the reaction of the new Egypt.”
Crude for December delivery, which expires today, rose as much as $1.12 to $86.57 a barrel in electronic trading on the New York Mercantile Exchange and traded at $86.55 a barrel at 1:33 p.m. London time. The more-actively traded January contract gained $1.04 to $86.91. Front-month futures are little changed this week.
Brent for January settlement increased 97 cents to $108.98 a barrel on the London-based ICE Futures Europe exchange. The front-month European benchmark grade was at premium of $22.07 to the corresponding WTI contract, down from $25.53 yesterday.
Oil may fall next week on concern weaker economic growth will reduce fuel demand and boost inventories, a Bloomberg survey showed. Sixteen of 33 analysts and traders, or 48 percent, forecast crude will decrease through Nov. 23. Thirteen respondents, or 39 percent, predicted a gain. Four forecast little change.
U.S. crude stockpiles rose 1.09 million barrels last week, the Energy Department reported. Oil output gained for a 10th week to 6.71 million barrels a day, the most since May 1994.
Oil in New York remains in a downtrend channel on the daily chart, signaling price advances may not be sustainable, compiled by Bloomberg show. Futures have traded between the middle and lower Bollinger Bands for almost two months. These indicators, representing technical resistance and support levels respectively, are around $87.80 and $82.30 a barrel today.
A long-range missile attack on Tel Aviv yesterday by Palestinian militants in Gaza “is an escalation and there will be a price to pay,” Ehud Barak, Israel’s defense minister, said on Channel 2 television. Israel Army Spokesman Brigadier General Yoav Mordechai told the same channel that the military was calling up 30,000 reservists.
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