Oil rose as Israel’s preparations for a ground invasion of Gaza revived concerns about the conflict disrupting supplies from the Middle East.
Israeli Prime Minister Benjamin Netanyahu said during a televised speech that the country is in a battle for its existence, adding that he won’t explain the reasons for the timing of the planned ground assault. West Texas Intermediate rallied above $85 a barrel during the speech, reigniting a war premium that had essentially vanished this week.
Earlier, the Wall Street Journal reported that Israel was delaying its ground invasion as the US readied air defenses to protect American troops in the Middle East. The report sent crude prices swinging, with the market trading in a range of about $3.50 on Wednesday.
“Crude is trading from headline to headline as the market tries to price in the potential” of war ensnaring multiple countries in the Middle East, said Rebecca Babin, a senior energy trader at CIBC Private Wealth. “Living headline-to-headline keeps traders on the edge of their seats and likely to react quickly before understanding the full impactions of what is happening.”
The US and Saudi Arabia agreed to pursue diplomatic efforts to maintain stability across the Middle East, the White House said Tuesday, helping to ease fears of major disruptions to the oil market. Additionally, the prospect of more Venezuelan crude exports has partially restrained the war’s risks.
- WTI for December delivery rose $1.65 to settle at $85.39 a barrel in New York.
- Brent for December settlement climbed $2.06 to settle at $90.13 barrel.
The war comes against pockets of weakness in the market for real-world barrels. US supplies were offered into Europe at the lowest levels in months on Tuesday as a slump in refinery profits and high freight costs weigh on prices. The decline is pressuring key market gauges at the front of the futures curve.
An Energy Information Administration report Wednesday showed inventories at the US’s biggest storage hub at Cushing, Oklahoma, increasing by 213,000 barrels, inching away from their operational minimums. US stockpiles rose by 1.37 million barrels last week.