Crude oil prices looked primed to extend a two-week rally this week amid deepening tensions between Israel and its neighbors, notably Lebanon.
Fears of a widening Middle Eastern war turned oil traders bullish, with Brent crude moving closer to $87 per barrel earlier today and West Texas Intermediate inching above $82 per barrel.
The price climb is happening despite presumably lukewarm demand for oil in the United States, as estimated by the Energy Information Administration earlier this week. The EIA's latest inventory report showed builds in both crude, gasoline, and middle distillates.
It is also happening despite a surprise increase in weekly jobless numbers, released yesterday and showing continuing jobless claims last week rose to the highest in 2.5 years, casting a shadow over reports about a strong economy. New jobless claims fell, however, which is what oil traders may have been watching instead.
In other economic news from the U.S., the Bureau of Economic Analysis released its latest revised estimate for GDP growth during the first quarter of the year, pegging the number at a not-very-exciting 1.4%, which was, however, up from an earlier estimate of 1.3%. MarketWatch remarked that this was the smallest growth rate in close to two years.
Consumer spending was a bigger cause for concern, it appears, as it grew at the slowest rate in eighteen months, the BEA figures showed. Expectations about record travel during this year's July 4 weekend, however, injected some bullishness about oil demand.
Even so, oil prices rose, suggesting the state of the U.S. economy is not the top concern of oil traders right now. As media reported that Israel had bombed a Lebanese village into the ground earlier this week, fears were reignited about an escalation in the Middle Eastern conflict that could draw in some of the largest producers of oil in the region, notably Iran.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More
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Comments
Of course geopolitical tension does help a bit but it is normally short-lived so it doesn't warrant much credit until its starts to adversely affect oil supplies. This isn.t truly happening.
Dr Mamdouh g Salameh
International Oil Economist
Global Energy Expert