Oil advanced for a third day to trade at a one-week high as US jobs data supported the case for Federal Reserve rate cuts this year, buoying risk assets including crude.
Brent pushed above $84 a barrel after a two-day climb that added about 1%, rebounding from the 100-day moving average. West Texas Intermediate neared $80. Initial applications for US unemployment benefits increased to the highest level since August, supporting the case for looser monetary policy. The dollar slipped on Thursday, making commodities more attractive for most buyers.
Crude’s latest gains mask relatively muted price action, with futures set to log their smallest weekly trading range since March. Prices remain higher this year, aided by OPEC+ supply cuts, solid global demand, and recurrent tensions in the Middle East. The Organization of the Petroleum Exporting Countries and its allies are due to meet next month to decide on output over the second half.
“The crude oil market will remain beholden to OPEC supply policies,” ANZ Banking Group Ltd. analysts Daniel Hynes and Soni Kumari said in a note. “Ongoing curtailments should support prices, but the market is susceptible to geopolitical issues.”
In the Middle East, Israel said it would press on with its fight against Hamas in the Gaza Strip even without help from the US. President Joe Biden had said he would halt additional shipments of offensive weapons to Israel if the country launched a ground invasion into Rafah.
Market indicators are mixed. Brent’s prompt spread — the gap between the two nearest contracts — was 55 cents a barrel in backwardation, a positive pattern. That’s little changed over the week, but lower than a month ago. Option skews remain in a bias toward puts, which profit from lower prices, and profits from making fuels like gasoline from crude have declined.
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