Oil prices in Asia rose on Friday, with Brent crude futures increasing by 2 cents to $79.18 a barrel, and U.S. West Texas Intermediate crude futures up by 10 cents to $76.29 per barrel. Both Brent and WTI were on track for weekly gains of more than 3%. The increase in oil prices was attributed to calming demand concerns due to positive U.S. jobs data, as well as ongoing fears of escalating conflict in the Middle East.
Analyst Tina Teng noted that risk sentiment improved in the Asian market, with Chinese inflation data signaling positive signs in the economy. China’s consumer price index (CPI) rose by 0.5% from a year earlier in July, slightly higher than expected, which led to a rise in China stocks. However, analysts cautioned that the increase in prices was largely due to weather disruptions affecting food supplies, and there was little evidence of a boost in consumer demand.
In the United States, positive data on new applications for unemployment benefits alleviated concerns about the labor market and eased recession fears. The stronger dollar that resulted from the jobs data typically leads to lower oil prices, as buyers using other currencies have to pay more for dollar-denominated crude.
Meanwhile, in the Middle East, Israeli airstrikes in the Gaza Strip intensified, leading to further conflict with Hamas-led militants. This, coupled with the killing of senior members of militant groups Hamas and Hezbollah, raised concerns about potential retaliatory strikes by Iran against Israel, impacting oil supply from the region. Additionally, Iran-aligned Houthi militants continued attacks on international shipping near Yemen in solidarity with Palestinians amidst the war between Israel and Hamas. Libya’s National Oil Corp. declared force majeure at its Sharara oilfield due to protests, leading to a reduction in the field’s output. In Saudi Arabia, the king decreed that the cabinet could convene in his and the prime minister’s absence, with his son Crown Prince Mohammed bin Salman serving as the de facto ruler since 2017.
Finally, it is important to note that markets in the key oil trading hub of Singapore were closed for a public holiday.