The oil market saw a big move on Friday. ICE Brent closed 5.69% higher on the day, taking the front-month contract back above $90 a barrel, its highest level since early October. Uncertainty and concern over the escalation of the war between Israel and Hamas continue to support the oil market. In recent days, Iran has warned of the risk of wider conflict, while there are reports that Saudi Arabia has frozen talks to normalize relations with Israel.
Another boost to the oil market was that the U.S. Treasury imposed sanctions on two companies that apparently shipped Russian oil above the G-7’s $60-a-barrel price ceiling while using U.S.-based shipping services. This is the first time we have seen the G-7 price cap being applied, which will raise fears that it will be harder to ship Russian oil and further tighten the market. The United States will be careful not to impose too strict a limit, especially given the growing tension in the Middle East.
Despite recent developments in the oil market, speculators remain reluctant to jump into the market. The latest positioning data shows that speculators reduced their net long position in ICE Brent by 65,161 lots during the last reporting week to 153,174 lots last Tuesday. This move was largely due to the liquidation of long positions.
The past week also saw a bit more activity from US oil drillers: The number of US oil rigs increased by 4 last week to 501. While only a modest increase, it is still the largest weekly increase since March . Changes in the number of drilling rigs will need to be watched in the coming weeks because, if this continues, it will suggest that US producers could be relaxing the capital discipline we have seen from them in recent years amid the weaker price environment. high.
China released its first batch of September trade data on Friday, showing that crude oil imports averaged about 11.17 million barrels/d for the month, down 11% month-on-month but still up 14% year-on-year. . This leaves accumulated imports during the first nine months of the year at 11.39 million barrels/d, a year-on-year increase of 14.5%.
Looking at this week’s calendar, the market will obviously follow closely how the situation between Israel and Hamas evolves. While in the case of natural gas markets, workers in Australia will resume striking at Chevron’s Gorgon and Wheatstone LNG facilities on Thursday if the parties involved cannot resolve their differences in final negotiations.