By Nicole Jao
NEW YORK (Reuters) -Oil prices rose almost 3% on Wednesday as investors worried conflict in the Middle East could intensify after the killing of a Hamas leader in Iran and after a sharp drop in stocks.
Global benchmark futures for September delivery, which expired on Wednesday, rose $2.09, or 2.66%, to $80.72 a barrel. The more active October contract gained $2.77 to $80.84.
U.S. West Texas Intermediate (WTI) crude futures rose $3.18, or 4.26%, to settle at $77.91 per barrel, the biggest daily gain since October 2023.
Still, Brent ended July with a monthly decline of almost 7%, while WTI fell almost 4% this month.
U.S. crude inventories fell by 3.4 million barrels last week, government data showed, more than triple the 1.1 million barrel drop analysts expected in a Reuters poll. Stock prices fell for the fifth week in a row, the longest streak of declines since January 2021.
“Robust exports have helped offset lower refining activity and strong imports, driving crude inventories down for the fifth consecutive year,” said Matt Smith, chief oil analyst at Kpler, calling the report “modestly supportive” of the report. mentions oil prices.
“Geopolitical risks remain the main driver of today’s rally,” Smith said.
A day earlier, Brent and WTI both lost around 1.4% to close at their lowest levels in seven weeks, after abandoning hopes for a Gaza ceasefire last week that eased tensions in the Central East and the associated supply problems.
Tensions rose overnight in the oil-producing region following news that Hamas leader Ismail Haniyeh had been killed in Iran.
This came a day after the Israeli government claimed it had killed Hezbollah’s top commander in an airstrike on Beirut in retaliation for Saturday’s rocket attack on Israel.
Separately, the US also carried out an attack in Iraq during the last conflict in the region.
“The overnight developments and increased geopolitical risk only provide a temporary reprieve for oil benchmarks. Unless oil and gas infrastructure is hit, the latest surge is unlikely to continue,” said Gaurav Sharma, an independent oil analyst in London.
A decrease of 0.4% in the also supported prices. A weaker dollar could boost oil demand by making the dollar-denominated commodity cheaper for holders of other currencies. [USD/]
Gains were limited by concerns about fuel demand in China, the world’s largest crude oil importer.
Chinese manufacturing activity shrank for a third month in July, an official factory survey showed on Wednesday.
The ample spare production capacity of OPEC members also weighed on prices.
OPEC+ is expected to stick to the current production agreement and start phasing out some production cuts from October.
Top OPEC+ ministers will hold an online joint ministerial monitoring committee (JMMC) on Thursday.
