As geopolitical tensions in the Middle East rise after reports that Iran is preparing a retaliatory attack on Israel from Iraq in the coming days, oil prices extended gains on Friday to trim weekly losses by raising more than $1 a barrel.
Brent crude futures for the January contract rose $1.41, or 2%, to $74.22 a barrel by 0456 GMT. WTI Crude futures rose $1.46, or 2.1%, to $70.72 a barrel after closing 0.95% higher in the previous session.
Iran is preparing to attack Israel in the coming days, likely ahead of the Nov. 5 U.S. presidential election, according to Israeli intelligence. The attack is expected to be carried out using a large number of drones and ballistic missiles from Iraq.
Oil prices were also supported by expectations that OPEC+ could delay a planned December oil output increase by a month or more, citing concerns about weak oil demand and rising supplies.
A decision to delay the increase could come as early as next week.
However, prices are expected to fall more than 1% during the week and are struggling to recover from a 6% loss on Monday after Israel’s Oct. 26 strike on Iranian military assets did not target oil or nuclear facilities and did not disrupt energy supplies.
Crude oil is on track to continue gains for a third straight day, but it has failed to fully cover the large gap that formed after Monday’s reopening.
However, with tensions in the Middle East back in focus, WTI’s recovery should extend to levels it closed at around $71.80 last Friday.
But next week, who wins the U.S. election and what fiscal stimulus details emerge from the NPC standing committee meeting will be important.
In China, a private sector survey showed that manufacturing activity returned to growth on Friday in October. On Thursday, an official survey echoed that manufacturing activity expanded in October for the first time in six months, suggesting that stimulus measures are having a positive impact.
The Energy Information Administration (EIA) said on Wednesday that U.S. gasoline inventories unexpectedly fell to a two-year low last week amid stronger demand, while crude oil inventories fell in a surprise decline as imports fell.
The world’s largest oil producer reached a monthly record of 13.4 million barrels per day in August, the EIA said.
