Investing.com — Oil prices edged higher on Tuesday, buoyed by possible supply disruptions amid fears that Iran is preparing an impending retaliation against Israel after the recent killing of a Hamas leader in Tehran.
At 2:30 PM ET (18:30 GMT), the price rose 0.3% to $76.56 per barrel, while it rose 0.5% to $76.56 per barrel.
Iran, Hamas retaliation against Israel in focus
Iran and Hamas have vowed retaliation after the killing of Hamas leader Ismail Haniyeh in Tehran.
On the Lebanon front, Israel continued its offensive against Hezbollah, while the threat of retaliation by the military group remained high. Israel claimed last week to have assassinated a key Hezbollah leader.
“Recent escalations in the Middle East, including the killings of Hezbollah and Hamas leaders, have heightened fears of a broader regional conflict,” Rystad Energy said in a recent note.
“These events appear to have disrupted ceasefire negotiations in Gaza, complicating mediation efforts and exacerbating the humanitarian crisis,” it added.
US weekly raw data viewed
While geopolitical tensions in the Middle East are expected to remain in the spotlight, new data on domestic crude inventories is also likely to influence price action.
Data due later in the session expects US crude inventories to have fallen by 3.1 million barrels in the week ending August 1.
The data comes ahead of the report expected on Wednesday.
Concerns about growth continue to play a role and more Chinese figures are expected
However, oil prices posted steep losses last month after falling to their lowest level in seven months on concerns about slowing growth and demand.
Weak US labor market data, especially Friday’s, was preceded by gloomy data from China, especially on the country’s manufacturing sector. The weak Chinese data added to concerns about slowing demand from the world’s largest oil importer.
More lectures from China will follow later this week, with an emphasis on insight into the country’s oil imports, especially for July.
The data is also expected to provide more clues about the Chinese economy, especially retail fuel demand.
Goldman sees the bottom at $75/bbl
Goldman Sachs points out that last week’s sharp drop in oil prices coincided with similar declines in stock prices and bond yields. This move suggests that macroeconomic fears, rather than oil market fundamentals, are the main drivers of the sell-off.
Despite these concerns, Goldman Sachs remains confident that the $75 bottom for Brent oil prices will persist, driven by several key factors, including resilient oil demand, limited recession risk and a possible recovery from speculative positioning.
The analysts note that oil demand remains robust in Western economies and solid in India. American demand for gasoline, European consumption of oil products and use of aviation fuel in OECD countries show above-trend growth.
In fact, US oil demand reached a record high in May, up 2% year-on-year, and Indian oil demand remained strong in July, up 4% year-on-year, according to state refiners.
Goldman sees room for recovery from speculative positioning in the oil markets. Current speculative positioning is at very low levels, offering potential for a recovery as growth sentiment improves.
(Peter Nurse, Ambar Warrick contributed to this article.)
