Investing.com — Oil prices fell to a weekly loss despite heading higher in volatile trading on Friday, as investors cooled their bets on a wider conflict in the Middle East after Isreal launched measured attacks on Iran and the latter showed little willingness showed to escalate the tit-for-tat skirmish.
At 2:30 PM ET (18:30 GMT), the price rose 0.5% to $83.14 per barrel, while it rose 0.3% to $87.33 per barrel. Both contracts ended the week about 3% lower as a stronger dollar weighed on expectations for longer US yields.
Tensions in the Middle East are hot again after the explosions in Iran
Both benchmarks were up 3% earlier Friday on reports of the missile strikes in Iran, but geopolitical tensions cooled after Iran downplayed the attack and appeared to indicate there was no intention to retaliate.
Iran’s Fars News Agency said explosions were heard in Isfahan in central Iran, parts of southern Syria and parts of Iraq. ABC News reported that US officials said Israel had retaliated against Iran.
Israel’s response to last week’s Iranian attacks on Tel Aviv, which were in retaliation for an alleged Israeli attack on an embassy in Damascus/
UN reports recently showed that Iran enriched uranium up to 60%, which was more than the level needed for commercial power generation. But it was also below the 90% enrichment level required for an atomic bomb.
The number of Baker Hughes drilling rigs is increasing
Oilfield services company Baker Hughes Co (NYSE:BKR) reported that the weekly U.S. rig count, a leading indicator of future production, rose to 511 from 506, signaling an increase in drilling activity amid a boost from higher oil prices.
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The number of drilling rigs still lags behind last year’s nearly 600 rigs, but domestic oil production is still expected to reach record highs this year as drillers continue to increase efficiency by focusing on the most promising drilling locations.
Goldman raises oil forecasts
“After a sharp rally to just above $90/barrel on rising geopolitical risks, Brent prices have risen have fallen to $87 per barrel,” Goldman Sachs analysts said in a note.
“We still see a ceiling of $90/bbl for Brent under our base case of noN The geopolitical offer is hitting,” said the influential investment bank. “The reasons for this are the high reserve capacity and above Prices are likely to lead OPEC+ to increase production in the third quarter, while inventories remain flat over the past year, and prices are already triggering stabilizing reactions, including increases in OPEC exports and lower crude oil demand from the US SPR and refineries.”
That said, the bench lays the floor Brent to $75 a barrel, from $70, the company says only a gradual normalization lower the risk premium, and believe that OPEC will succeed in keeping spot prices above levels long-term prices due to a smaller reduction in production cuts than we had assumed for.
Moreover: “we still see value in long oil positions given ssignificant benefits in portfolio hedging against geopolitical shocks, and attractive rollover yield of 10% on an annual basis.”
It also lifts his Brent expects $86 per barrel for the second half of 2024, versus $85 previously, and $82 per barrel for 2025, starting at $80.
(Ambar Warrick contributed to this article.)
