Oil Trades Near One-Week High After Israeli Air Strikes on Gaza
Oil traded near the highest level in more than a week after Israel attacked the Gaza Strip, raising concern that Middle East unrest would disrupt supply. A report showed U.S. stockpiles rose to the highest since July.
Futures were little changed in New York after advancing for the first time in three days yesterday. The air strikes killed Ahmed al-Jabari, the leader of Hamas’s military wing, according to Gaza’s Health Ministry. The Israeli army said it called up reserves for a possible infantry assault on Gaza that would be the first since 2008. U.S. crude inventories climbed 1.35 million barrels last week, data from the American Petroleum Institute showed. Government data today may show a gain of 2.65 million barrels, according to a Bloomberg News survey.
“Middle Eastern tension will skew the bias to the upside,” said Michael Poulsen, an analyst at Global Risk Management in Middelfart, Denmark. “We continue to advise consumers to take advantage of any dips in the market.”
Crude for December delivery was at $86.31 a barrel, down 1 cent, in electronic trading on the New York Mercantile Exchange at 10:33 a.m. London time. The contract increased 94 cents, or 1.1 percent, to $86.32 yesterday, the highest settlement since Nov. 6. Prices have lost 13 percent this year.
Brent for December settlement on the London-based ICE Futures Europe exchange, which expires today, rose 49 cents to $110.10 a barrel. The more actively traded January contract gained 30 cents to $108.78. The European benchmark crude was at a $23.84 premium to New York futures, from $23.29 yesterday.
Oil in New York remains in a downtrend channel on the daily chart, signaling price advances may not be sustainable, data 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 $88 and $82.50 a barrel today.
The Israeli strikes followed the firing of more than 115 rockets from Gaza into Israel this week, adding to a total of about 14,000 missiles fired from the territory in the past 11 years, according to the Israeli Defense Ministry. Since the conclusion of Israel’s 2008 ground attack on Gaza, the government has said it holds Hamas responsible for the rocket attacks because it runs the coastal territory.
“Adjusting risk premium in response to Middle East events is standard fare for oil markets,” said Ric Spooner, a chief market analyst at CMC Markets in Sydney. “Traders have to be conscious that the more likely alternative is that nothing comes out of this as the oil market is concerned and they don’t want to be left with a position in a well-supplied market.”
U.S. crude stockpiles probably climbed to 377.5 million barrels in the week ended Nov. 9, the highest since July, according to the median estimate of 10 analysts surveyed by Bloomberg. The Energy Department is releasing weekly supply data a day later than usual because of the Veterans Day holiday on Nov. 12.
Gasoline inventories slid 103,000 barrels last week, said the industry-funded API. Supplies are forecast to fall 1 million barrels, according to the survey. Distillate-fuel inventories, including heating oil and diesel, rose 184,000 barrels compared with a projected decline of 950,000 barrels in the survey.
The API collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the Energy Department for its weekly survey.
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