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In a positive turn of events, Oil Prices Drop as Hamas Frees on Friday following the release of two American hostages by the Islamist group Hamas in Gaza. This development has ignited hopes that the Israeli-Palestinian crisis might de-escalate, potentially averting a broader regional conflict that could disrupt oil supplies.
Brent Crude Falls
Brent crude futures saw a drop of 22 cents, equivalent to 0.2%, settling at $92.16 per barrel.
US West Texas Intermediate Decline
The U.S. West Texas Intermediate crude futures for November delivery, which expired post-settlement on Friday, observed a decrease of 62 cents, or 0.7%, landing at $88.75 per barrel. Meanwhile, the more-active December WTI contract concluded 29 cents lower at $88.08 per barrel.
Hamas’ Humanitarian Release
Hamas’ armed wing made the humanitarian gesture of releasing two American hostages, a mother and her daughter, citing “humanitarian reasons.” This release came in response to Qatari mediation efforts during the ongoing conflict with Israel. Abu Ubaida, the group’s spokesman, made this announcement on Friday.
Market Responds to Reduced Risk
“The report took some of the risk premium out of the market,” commented Phil Flynn, an analyst at Price Futures Group. He added, “The market went from starting the day with little hope and went to possible signs that there may be some way out of this crisis.”
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Weekly Gains
Both crude oil contracts had previously experienced gains exceeding one dollar per barrel during the session due to signs of an escalating conflict. This marked the second consecutive week of gains for both front-month contracts.
Concerns About the Middle East
“The Middle East remains a big focus of the market because of fears of a region-wide conflict that would likely involve a disruption of oil supplies,” noted John Kilduff, a partner at New York-based Again Capital. While supply disruptions may now seem less likely, Kilduff emphasized that the market must remain vigilant, especially over the weekend when situations can change rapidly.
Market Support
Supporting Oil Prices Drop as Hamas Frees were forecasts of a tightening market in the fourth quarter after major producers, Saudi Arabia and Russia, extended supply cuts until the end of the year. Additionally, substantial inventory draws, primarily in the United States, strengthen the argument for an undersupplied market, according to UBS analyst Giovanni Staunovo.
Price Expectations
UBS anticipates that Brent prices will fluctuate within the $90 to $100 per barrel range in the coming sessions. This indicates optimism in the market about the potential stability of oil prices.
Money Managers Adjust Positions
In the week ending October 17, money managers reduced their net long positions in U.S. crude futures and options by 56,850 contracts, bringing the total to 183,351. This data was released by the U.S. Commodity Futures Trading Commission (CFTC) on Friday.
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Disclaimer:
Please note that this article serves solely for informational purposes. As such, it is not financial advice. We strongly advise readers to conduct thorough research and consult with financial professionals before making any investment decisions.
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