Oil prices remain volatile as Middle East tensions rise
Oil prices jumped slightly from its lowest in two months on Thursday, as concerns grew that demand for crude will be disrupted as Middle East tension takes an upturn over Iran`s nuclear program and speculation rose that China will introduce new stimulus measures to boost growth.
NYMEX WTI Crude for November delivery was up 0.30 percent at $88.55 as of 07:29 GMT, compared with the opening level of $88.27, recording an intraday high of $88.75 and low of $87.90, off a two-month low of $87.70. ICE Brent crude rose 0.71 percent to $108.86.
Prices are actually not that far from a two-month low ahead of the hectic day for global economy, as central banks from China and Europe prepare to announce key rate decisions. The People`s Bank of China is expected to push on further monetary easing to counter economic slowdown.
Oil gains are strongly inspired by the ongoing turmoil in the Middle East and Iran in particular, given the odds of military action between Israel and Iran, the world`s third-largest oil exporter, risking crude supplies, which could push prices back to stabilize above $90 a barrel.
The global slowdown is denting oil demand in China, where manufacturing contracted for two months in a row for the first time since 2009. Fitch Ratings lowered its 2012 growth forecast for China, expected to expand 7.8 percent this year
Oil markets continue to face downside risks from the world`s leading economies. In the U.S., an inevitable fiscal cliff is looming as the Congress struggles to reach a budget deal risking a possible recession, as well as jobless rate lingering above 8 percent since more than three years.
In Europe, demand for crude has definitely slowed as investments fell with expectations the euro area economy is heading into a double-dip recession in the third quarter, as manufacturing and services shrank as a result of the debt turmoil and, high unemployment as well as austerity drive.
Uncertainty remains the main theme in Europe, and Spain, which takes the center of the three-year-old debt crisis, continue to shake market sentiment ahead of a possibly looming request for a sovereign bailout, easing the pressure on the government`s benchmark 10-year yields.
Meanwhile, markets are looking upon Spain to see whether the government will decide to tap the ECB`s new bond-buying plan, ahead of the awaited ECB monetary decision on Thursday. Recent reports showed the Spain is ready for a bailout but not as early as this weekend.
- Oman's fiscal break-even oil price second highest in the GCC: Moody's
- A new era of GCC power relations? UAE, Oman, Iraq now represent 60% of regions’ upstream oil transactions
- Oman slated to be MENA's next hub for solar technology
- The future of Bahrain's energy sector
- Why 2018 will be the year for Jordan's energy sector