Increased concerns that the Israel-Hamas conflict may spread throughout the Middle East and disrupt supplies from one of the world’s top producing regions sparked oil prices extended gains on Friday and were on track for a second week of gains.
By 0307 GMT, the price of Brent crude futures had increased by 94 cents, or 1%, to $93.32 per barrel. In The US, the price of West Texas Intermediate (WTI) crude was up $1.41 or 1.6 percent, at $90.78 per barrel.
This coming Friday is the end of the front-month November contract.
The more active December WTI contract was trading at $89.47 per barrel, up $1.24 or 1.1%.
An explosion this week at a hospital in Gaza and the expected ground invasion by Israeli forces have increased concerns that the Middle East conflict will spread.
As a result, both contracts are on track to post a second weekly gain.
“The bigger concern remains that the escalation of tension that we’re likely to see with regard to the IDF (Israel Defence Forces) entering Gaza this weekend means the risk to crude oil is towards higher prices,” IG analyst Tony Sycamore said.
Israeli Defence Minister Yoav Gallant hinted that a predicted ground invasion might be approaching when he told troops assembled at the Gaza border on Thursday that they would soon see the Palestinian enclave “from inside.”
The US reported by the Pentagon that it had intercepted missiles fired toward Israel from Yemen, increasing concerns about the conflict spreading.
According to Sycamore, if WTI breaks resistance at $91.50, it could move higher and reach a high last seen in late September at $95.03 per barrel.
With major producers Saudi Arabia and Russia extending supply cuts to the end of the year, as well as low inventories, particularly in the United States, oil prices are also supported by projections of a growing deficit in the fourth quarter.
In keeping with its plan to restock the emergency stockpile, Washington is looking to purchase 6 million barrels of crude for delivery to the Strategic Petroleum Reserve in December and January, the U.S. Department of Energy declared on Thursday.
Concurrently, a brief easing of the US according to OPEC+ sources who spoke to Reuters, the oil sanctions imposed on OPEC member Venezuela are unlikely to necessitate any immediate policy changes by the OPEC+ producer group because production is expected to recover gradually.
“The prospect of more Venezuela oil did little to ease concerns of disruptions in the Middle East,” analysts at ANZ Research said in a note to clients on Friday.
