Oil fell as a drop in wider financial markets and softer real-world prices dented gains from Israel’s planned ground invasion of Gaza.
West Texas Intermediate fell to settle near $83 a barrel, adding to a two-week string of sessions in which prices have swung in a range of more than $2. Israeli Prime Minister Benjamin Netanyahu said his nation was in a battle for its very existence and that an invasion was being prepared. The country’s armed forces said they had entered northern Gaza to attack cells overnight before exiting the area.
“The turbulent price action” continues to “whipsaw algorithmic trend followers” and could spark selling by commodity trading advisers, said Dan Ghali, a commodity strategist at TD Securities.
But prices of low-sulfur barrels have tumbled this week, denting faith in how tight supplies are. That has shown up in key gauges of market health, with nearby timespreads softening markedly. Equity markets were also lower, and the dollar firmed on Thursday, making commodities priced in the currency less appealing.
The widely expected ground offensive had been delayed to allow the US to deploy air-defense systems in the region, according to the Wall Street Journal. Meanwhile, diplomatic efforts to avert a wider war continued, with French President Emmanuel Macron saying a massive ground operation would be a mistake during a visit to the region. The flurry of headlines has bolstered intraday oil price volatility over the last few weeks.
Beyond the Middle East, US stockpiles rose by 1.37 million barrels last week, Energy Information Administration data showed. Inventories at the Cushing, Oklahoma, storage hub expanded by 213,000 barrels. Physical oil markets across the world are also seeing a slump in prices as profits from making fuels such as gasoline dip ahead of the winter season.
- WTI for December delivery retreated $2.18 to settle at $83.21 a barrel in New York.
- Brent for December settlement fell $2.20 to settle at $87.93 a barrel