ALBAWABA – Oil prices rebounded on Tuesday despite China’s PMI pointing to a decline in factory activity in October, as occupation forces stepped up the Israeli onslaught on Gaza, fanning fears of a regional conflict breaking out and disrupting oil supplies from the Middle East.
China's Purchasing Managers' Index (PMI) fell below the lowest forecasts in October, across the manufacturing and non-manufacturing boards, indicating an overall decline in demand for Chinese products and services.
Yet, December Brent crude futures, to expire Tuesday, rose $0.65 today, Tuesday, to $88.10 a barrel by 0637 GMT, according to Reuters, while the more heavily traded January futures climbed $0.63 to $86.98.
Meanwhile, West Texas Intermediate crude increased $0.67 to $82.98 a barrel.
Escalations on the Gaza and northern fronts, with the Hamas-led resistance and Hezbollah, put upward pressure on oil prices, outweighing the prospects of declining demand in China.
The onslaught on Gaza spiralling into a regional war will disrupt supplies from Iran and the rest of the region, driving oil prices through the roof - Shutterstock
Oil prices are wrapping up a turbulent month, rocked first by the surprise Gaza attack and then by the Israeli onslaught on Gaza, amid mixed indicators on demand, according to Bloomberg.
Both WTI and Brent are on course to cap declines in October as the risk premium triggered by the conflict in occupied Palestine fades.
In the meantime, the narrowing in WTI’s prompt spread — the difference between its two nearest contracts — suggests that near-term conditions are becoming less tight.
The widely watched differential has dropped back to $.65 a barrel in backwardation, down from about $2 a barrel at the end of September, Bloomberg reported.
Even as concerns of a global slowdown are returning to the fore, those arising from the possibility of disrupting Iranian oil supplies are mounting.
Such lost supply could range between 500,000 barrels per day (bpd) and 1 million bpd if the United States strictly enforces sanctions once again, Reuters’ analysts said.
So far, escalations in Palestine have yet to affect oil supplies from the region, but the onslaught on Gaza spiralling into a regional war would definitely hurt the region’s outflows.
