Oil rally cools as focus remains on Israel-Hamas war, more Fed cues
Investing.com-- Oil prices fell in Asian trade on Thursday after a strong run of gains this week as markets awaited more developments in the Israel-Hamas war, while upcoming signals from the Federal Reserve were also in focus.
An escalation in the conflict, after the deadly bombing of a Gaza hospital and the cancellation of a summit between U.S., Egyptian and Palestinian leaders greatly boosted oil prices this week as markets feared that other Arab countries could join the fray.
Such a scenario is expected to disrupt supplies in the oil-rich region, potentially tightening global crude markets. Iranian ministers urged for an oil embargo on Israel, although the Organization of Petroleum Exporting Countries said it had no action planned at the moment.
Signs of tighter supplies were furthered by U.S. inventories logging a bigger-than-expected draw in the week to October 13. A sustained drop in gasoline and distillate inventories indicated that U.S. fuel demand remained robust.
Oil markets were also encouraged by data showing better-than-expected economic growth in world no.1 oil importer China, although growth still remained below pre-COVID levels.
Crude prices jumped around 2% on Wednesday. But this rally now appeared to have paused as the dollar rose, while a steep sell-off in bond markets also rattled sentiment.
Brent oil futures fell 0.4% to $90.94 a barrel, while West Texas Intermediate crude futures fell 0.5% to $86.84 a barrel by 20:28 ET (00:28 GMT).
The prospect of tighter supplies, following steep production cuts by Russia and Saudi Arabia, have been a major boost to oil prices this year. But the rally somewhat cooled in recent weeks, as fears of higher-for-longer U.S. rates crept back into markets.
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