Adedapo Adesanya
By Adedapo Adesanya
The price of the Brent crude futures depreciated by $1.92 or 2.3 per cent to $84.89 per barrel on Friday as supply concerns, driven by Middle East tensions, eased.
Also, the price of the US West Texas Intermediate (WTI) went down by $1.95 or 2.4 per cent to $80.51 a barrel as jobs data raised expectations that the Federal Reserve could be done hiking interest rates in the biggest oil-consuming economy.
On a week-on-week basis, both benchmarks lost more than 6 per cent.
Analysts say the market is taking this conflict in its stride, as it looks to be neither a significant demand nor supply disruption event.
Hezbollah leader, Mr Sayyed Hassan Nasrallah, while speaking for the first time since the Israel-Hamas war erupted, warned yesterday that a wider conflict in the Middle East was possible.
He, however, did not commit to opening another front on Israel’s border with Lebanon.
Also, US job growth slowed more than expected in October, official data showed, while wage inflation cooled, pointing to an easing in labour market conditions.
The data bolstered the view that the US Federal Reserve need not raise interest rates further.
The US central bank held interest rates steady this week, while the Bank of England kept rates at a 15-year peak. These moves supported oil prices as some risk appetite returned to markets.
A survey on Friday showed that while China’s services activity expanded at a slightly faster pace in October, sales grew at the softest rate in 10 months and employment stagnated as business confidence waned.
The data followed a reading from the National Bureau of Statistics on Wednesday that showed China’s manufacturing activity unexpectedly contracted in October.
On the supply side, Saudi Arabia is expected to reconfirm an extension of its voluntary oil output cut of 1 million barrels per day through December.
The US House of Representatives easily passed a bill to bolster sanctions on Iranian oil in a strong bipartisan vote, but it was unclear how effective the legislation would be if signed into law.
While Congress can pass sanctions legislation, such measures often come with national security waivers that allow presidents discretion in applying the law.
China could also continue to import the oil despite new sanctions.
Iran’s oil minister, Mr Javad Owji, said the Middle Eastern country has increased its crude production to 3.4 million barrels per day and expects output to grow further over the upcoming months, marking a 100,000 barrels per day increase since the minister’s previous estimate in August.
