By Adedapo Adesanya
Crude oil edged higher on Tuesday as investors wait to see if the United States diplomatic efforts and a trip by President Joe Biden to Israel will prevent the conflict in the Middle East from widening.
At the market yesterday, Brent moved up by 25 cents to $89.90 a barrel and the US West Texas Intermediate (WTI) was relatively unchanged at $86.66 per barrel.
Mr Biden’s visit to Israel on Wednesday will seek to balance showing support for Israel’s war on Hamas and trying to rally Arab states to help prevent a regional conflict.
This is coming after Iran, a member of the Organisation of the Petroleum Exporting Countries (OPEC), pledged pre-emptive action from the resistance front of its allies including the Hezbollah movement in Lebanon.
Fears that the Israel-Hamas conflict could widen into the oil-producing region have been a core focus as Brent gained 7.5 per cent in its largest weekly gain since February last week.
Support also came as US retail sales increased more than expected in September as households stepped up purchases of motor vehicles and spent more at restaurants and bars.
According to the data coming on the heels of stronger-than-expected employment growth and consumer price readings in September, the reports raise the risk of the Federal Reserve hiking interest rates in December or January.
Richmond Federal Reserve Bank chief Thomas Barkin also said that higher long-term US borrowing costs are putting downward pressure on demand but it was unclear how that will affect the central bank’s rates decision in three weeks.
Crude oil inventories in the US fell by 4.383 million barrels for the week ending October 13, according to the American Petroleum Institute (API), countering the large 12.940-million-barrel rise in crude inventories in the week prior, API data showed.
The official data from the US Energy Information Administration (EIA) will be released later on Wednesday.
Prices were weighed by the possibility of increased supply as Venezuela’s government and its opposition are set to resume long-suspended talks, which could lead to easing sanctions.
Since 2019, the US has imposed sanctions on oil exports from Venezuela, an OPEC member, to punish President Nicolas Maduro’s government following elections in 2018 that the then-Donald Trump-led US administration considered a sham.
The US government has been seeking ways to increase the flow of oil to world markets to alleviate high prices but any real oil output increase by Venezuela will take time because of a lack of investment.
Dipo Olowookere