Oil headed for a modest weekly gain as fears the Israel-Hamas conflict could destabilize the Middle East and crimp global supply were offset by signs of flagging demand.
West Texas Intermediate rose above $83 a barrel on Friday and is up around 1% of the week. Most of the surge on Monday following the Hamas attack on Israel has now been unwound on expectations the conflict will be contained, with OPEC linchpin Saudi Arabia urging peace in a rare high-level diplomatic call with Iran. Still, an Israeli ground invasion of Gaza could lead to more volatility.
The biggest increase in US crude stockpiles since February helped push oil prices down on Thursday, while demand for gasoline in the world’s largest economy continues to hover near 2008 lows. The International Energy Agency said that oil’s recent retreat from near $100 a barrel showed that prices had climbed high enough to start eroding demand.
Crude has had a volatile week following the initial shock of the Hamas assault, with traders seeking to price in potential repercussions including the potential for the conflict to draw in Iran. The Organization of Petroleum Exporting Countries on Thursday continued to flag a record oil supply deficit this quarter, with global inventories set to decline by some 3 million barrels a day.
The US also imposed the first sanctions for violations of the price cap on Russian oil, on mounting evidence the restriction is failing to cut Kremlin revenue as hoped.
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