Oil rises to its highest level in 7 weeks amid conflict fears

Wednesday, June 19, 2024 - 20:26
Point Trader Group

Oil prices rose, on Wednesday, to their highest level in seven weeks, after optimism about summer demand and fears of escalating conflicts outweighed the impact of a report stating that US crude inventories increased unexpectedly.

Brent crude futures for August delivery, which expire tomorrow, Thursday, rose 20 cents to $85.53 a barrel, and September futures rose 21 cents to $84.74 a barrel.

US West Texas Intermediate crude rose three cents to $81.60 a barrel.

After the two benchmarks rebounded strongly in the past two weeks, they rose more than a dollar in the previous session to reach the highest level in seven weeks after a Ukrainian drone strike caused a fire to break out in an oil terminal in a major Russian port.

In the Middle East, Israeli Foreign Minister Yisrael Katz warned of a possible "all-out war" with Lebanon, at a time when the United States is trying to avoid expanding the circle of conflict between Israel and Hezbollah.

In this context, Yip Jun Rong, a market strategist at IG in Singapore, said, “Any calming of the conflict between the two parties seems difficult in the near term, which will keep oil prices high despite investors in the oil market ignoring the weaknesses on the economic front from retail sales in the United States.” The United States came in weaker than expected due to a mixed set of data coming out of China this week.

Data released from China this week showed that growth in industrial production in May was below expectations, but retail sales, which reflect the level of consumption, witnessed the highest growth rate since last February.

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