The price of crude oil futures experienced a slight increase for the second consecutive week. Concerns about the conflict in the Middle East expanding contributed to the rise in prices. However, U.S. efforts to delay Israel’s invasion of Gaza caused prices to dip slightly on Friday.
Initially, Israel resisted delaying its military operation to eradicate Hamas, but under U.S. pressure, it agreed to hold off on the attack. This development, along with Hamas releasing two U.S. hostages from Gaza, reduced the risk premium in the market, according to Price Futures analyst Phil Flynn.
The conflict escalated when a U.S. Navy warship intercepted multiple missiles near Yemen, potentially aimed at Israel. In response to these escalating tensions, crude oil prices rose late Thursday and early Friday.
For the week, front-month Nymex crude (CL1:COM) for November delivery ended with a modest increase of 1.2%, closing at $88.75 per barrel. December Brent crude (CO1:COM) also rose by 1.4% to $92.16 per barrel. Additionally, front-month November RBOB gasoline (XB1:COM) finished the week with a significant gain of 4.8% at $2.3736 per gallon.
While the conflict between Iran and Hamas has not yet impacted oil supply, the tense situation in the Middle East justifies a certain geopolitical risk premium. “Oil prices are therefore likely to remain well supported, especially as the oil market is significantly undersupplied at present,” said Commerzbank’s Barbara Lambrecht. She also noted that U.S. crude oil stocks are nearly 5% below normal levels for this time of year.
Despite widespread losses in the stock market, the energy sector managed to show a gain of 0.7% for the week. Among the top gainers in energy and natural resources during the past five days were NMG (+33.3%), METC (+19.3%), VGAS (+12.6%), VTS (+9.9%), and LBRT (+9.8%).
On the other hand, some energy and natural resource companies experienced declines during the same period. The top 10 decliners were SMR (-34.2%), EVA (-25.1%), FMST (-23.1%), LAC (-19.8%), ABAT (-18.9%), OPAL (-17.9%), PLUG (-16.9%), NRGV (-16.2%), ALB (-15.1%), and FLNC (-12.7%).