Oil rebounds after killing of Hamas leader in Iran, but China caps gains
Shafaq News/ Oil futures rebounded more than $1a barrel from 7-week lows on Wednesday after the killing of Hamas leader IsmailHaniyeh in Iran ratcheted up tensions in the Middle East, but prices stayedunder pressure from concerns about weak China demand.
Brent crude futures climbed $1.17, or 1.5%, to$79.80 a barrel by 0346 GMT ahead of expiry on Wednesday, while the more activeOctober contract was at $79.18, up $1.11.
U.S. West Texas Intermediate crude futures rose$1.15, or 1.5%, to $75.88 a barrel. Both Brent and WTI fell about 1.4% onTuesday, closing at their lowest levels in seven weeks.
Tension in the Middle East heated up followingreports that Hamas chief Ismail Haniyeh has been assassinated in Iran,according to a statement from the Palestinian militant group Hamas and Iranianstate media report on Wednesday.
This came a day after the Israeli governmentclaimed it killed Hezbollah's most senior commander in an airstrike on Beiruton Tuesday in retaliation against Saturday's cross-border rocket attack onIsrael.
The latest attack took place despite diplomaticefforts by U.S. and UN officials to avert a major escalation that could inflamethe wider Middle East.
Separately, the United States also conducted astrike in Iraq in the latest conflict in the region.
"I think putting it all together certainlyraised the chances of escalation in the Middle East," IG analyst TonySycamore said.
"Worth noting as well that after threestraight weeks of declines, long positioning from speculative accounts in crudeoil has been significantly reduced. Hence conditions are ripe for arebound."
Still, Brent and WTI are on track to post inJuly their biggest monthly loss since 2023 on lingering concerns about China'sdemand outlook and expectations OPEC+ will be sticking to their current deal tocut production and to start unwinding some cuts from October, despite recentsharp declines in oil prices.
Top ministers from the Organization of thePetroleum Exporting Countries and allies led by Russia, or OPEC+, as the groupis known, will hold an online joint ministerial monitoring committee meeting(JMMC) on Thursday at 1000 GMT.
Slowing fuel demand in China, the world'slargest crude oil importer and the biggest contributor to global demand growth,is also weighing on oil markets.
China's manufacturing activity in July shrankfor a third month, an official factory survey showed on Wednesday, keepingalive expectations Beijing will need to launch more stimulus as a protractedproperty crisis and job insecurity drag on growth.
"I think the China story is also wellpriced in - it is what has driven the market lower in recent weeks," INGhead of commodities research Warren Patterson said.
In the United States, crude, gasoline anddistillate inventories fell last week, according to market sources citingAmerican Petroleum Institute figures on Tuesday.
Data from the Energy Information Administrationis due at 10:30 a.m. EDT (1430 GMT) on Wednesday.
Ten analysts polled by Reuters estimated thatcrude inventories on average fell by 1.1 million barrels in the week to July26.
(Reuters)
