HOUSTON, Oct 11 (Reuters) – Oil prices ended lower on Friday but experienced gains for the second week in a row. Investors considered the potential for supply disruptions in the Middle East and the effects of Hurricane Milton on fuel demand in Florida.
Brent crude futures fell by 36 cents, or 0.45%, to settle at $79.04 a barrel. Similarly, U.S. West Texas Intermediate (WTI) crude futures dropped by 29 cents, or 0.38%, closing at $75.56 per barrel. Despite Friday’s declines, both benchmarks saw an increase of over 1% for the week.
According to the Intercontinental Exchange, money managers increased their net long positions on Brent crude by 123,226 contracts, bringing the total to 165,008 contracts for the week ending October 8.
Tim Snyder, chief economist at Matador Economics, noted, “Markets can feel the tension as Israel considers its response to Iran’s missile attack. If Israel targets Iran’s oil and gas infrastructure, prices will rise.” Crude prices have surged this month following Iran’s launch of over 180 missiles at Israel on October 1, raising concerns about potential retaliation against Iranian oil facilities. As of now, Israel has not responded.
John Kilduff, a partner at Again Capital in New York, stated, “A price of $75 per barrel for WTI is a fair value given the current tensions.” Israeli Defense Minister Yoav Gallant warned that any action against Iran would be “lethal, precise, and surprising.”
Analyst Giovanni Staunovo from UBS emphasized, “We need to see how Israel responds. Until then, the oil market will likely maintain a risk premium.” Iran supports several groups opposing Israel, including Hezbollah in Lebanon, Hamas in Gaza, and the Houthis in Yemen.
Gulf states are urging Washington to prevent Israel from striking Iran’s oil facilities, fearing their own oil assets could be targeted by Tehran’s allies if the situation escalates, according to three Gulf sources.
Meanwhile, Hurricane Milton hit the Atlantic Ocean after devastating parts of Florida, resulting in at least 10 fatalities and widespread power outages. Gasoline shortages plagued Florida earlier in the week as residents filled up their tanks ahead of the storm. By Wednesday morning, nearly a quarter of the 7,912 gas stations in Florida were out of fuel. The hurricane’s aftermath could reduce fuel consumption in the state.
Florida ranks as the third-largest gasoline consumer in the U.S. but relies on waterborne imports since it has no refineries.
Additionally, concerns over high crude inventories and a potentially slower easing of monetary policy by the U.S. Federal Reserve have contributed to the pause in the recent oil price rally, according to Yeap Jun Rong, a market strategist at IG.
On the supply front, Libya’s National Oil Corporation announced on Friday that it has restored oil production to pre-crisis levels, reaching 1.25 million barrels per day.
Furthermore, weakening third-quarter earnings from major oil companies may have impacted investor sentiment. BP stated that weak refining margins and reduced oil trading could lower its third-quarter profit by up to $600 million due to a global slowdown in fuel demand.
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