Middle East Tensions Drive Oil Prices Up

1 Aug 2024 , 10:16 AM

Early Asian trade on Thursday saw a rise in oil prices, continuing their significant gains from the previous day when the death of a Hamas commander in Iran stoked concerns about a potential larger Middle East conflict as well as indications of high oil demand in the United States.

U.S. West Texas Intermediate crude futures had increased 69 cents, or 0.9%, to $78.60 per barrel, while global benchmark Brent crude futures had gained 67 cents, or 0.8%, to $81.51 per barrel.

In the previous session, there was a roughly 4% increase in the most active contracts on both benchmarks.

The United States’ oil stocks have had a five-week run of declines, the longest since January 2021.

According to a separate EIA data release on Wednesday, gasoline consumption reached its highest point since before the pandemic in May, driving up U.S. oil demand to a seasonal record.

The Federal Reserve kept interest rates unchanged on Thursday, but left the door open for a reduction in September. In the meantime, the U.S. dollar index continued its losses from the previous session. Investors holding other currencies may want more oil if the dollar declines.

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