Mideast Worry Puts Floor Under Oil Ahead of U.S. Jobs Data

© Reuters.

Barani Krishnan

AiVIF.com - Crude prices pulled back from some of their three-day loss as Middle East tensions help put a floor under the market ahead of Friday’s U.S. jobs report for July.

New York-traded U.S. West Texas Intermediate crude, the benchmark for U.S. oil, settled up 94 cents, or 1.4%, at $69.09 per barrel. WTI lost almost 8% in three previous sessions.

London-traded Brent, the global benchmark for oil, settled up 91 cents, or 1.3%, at $71.29. Brent lost almost 7% in the three previous sessions. 

“WTI crude will likely consolidate between the $67-$71 trading range until tomorrow’s employment report which could determine the next major move for the dollar,” said Ed Moya, analyst at New York’s OANDA.

The U.S. Labor Department will issue on Friday the non-farm payrolls report for July that could help the Federal Reserve decide how to progress with the stimulus of $120 billion it has been providing markets and the economy through bond purchases since the Covid outbreak of March 2020. Economists are projecting a jobs gain of 870,000 in July to follow through with June’s 850,000.

In the Middle East, Israeli jets struck what its military said were rocket launch sites in Lebanon early on Thursday in response to two rockets fired towards Israel from Lebanese territory, in an escalation of cross-border hostilities amid heightened tensions with Iran.

The exchange came after an attack on a tanker off the coast of Oman last Thursday, which Israel blamed on Iran. Two crew members, a Briton and a Romanian, were killed. Iran denied any involvement.

Tensions in the region appeared to negate any immediate possibility of Iran resuming nuclear talks with Western powers that would be key to removing U.S. sanctions on its oil. Without that reprieve, oil bulls can breathe a little easy, knowing that Tehran isn’t likely to add hundreds of thousands of new barrels to the market that may not immediately find a home.

Offsetting the Mideast tensions, concerns over the recovery of global oil demand grew amid a surge in coronavirus cases.

Japan is poised to expand emergency restrictions to more prefectures while China, the world’s second-largest oil consumer, has imposed curbs in some cities and cancelled flights, threatening fuel demand.

In the United States, the world’s biggest oil consumer, Covid-19 cases hit a six-month high with more than 100,000 infections reported on Wednesday, according to a Reuters tally.