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Oil prices surged today as Chinese economic data showed improvement, while tensions between Israel and Hamas escalated, driving concerns about supply disruptions.
Image Source: CNBC
Oil prices climbed on Friday, continuing their upward trend on signs of a strengthening Chinese economy and escalating tensions between Israel and Hamas. Brent futures rose by 37 cents to USD 84.24 a barrel, while U.S. West Texas Intermediate crude grew by 41 cents to USD 79.64.
The increase followed a previous session where oil prices reached a one-week high, buoyed by rising crude oil imports in China and market perceptions of a cooling U.S. job market possibly prompting interest rate cuts.
China’s economic rebound was underscored by its exports and imports returning to growth in April after a contraction in the previous month, signaling improved demand. “Ongoing signs of strength in demand in China should see the commodity market remain well supported,” noted ANZ Research.
However, uncertainties loomed over the U.S. economy, particularly regarding inflation and interest rates. San Francisco Federal Reserve President Mary Daly expressed considerable uncertainty about future inflation trends while also hinting at possible interest rate cuts. Financial markets anticipated a potential easing cycle by the U.S. central bank starting in September.
Meanwhile, the Middle East saw a dangerous escalation in tensions as Israeli forces intensified bombings in areas like Rafah. Palestinian residents reported airstrikes, while Israeli Prime Minister Benjamin Netanyahu dismissed U.S. President Joe Biden’s threats to withhold weapons if Israel continued its assaults on Gaza.
Image Source: The Daily Beast
Source: BBC
Efforts to negotiate a ceasefire in Cairo ended without resolution, prompting Israel to proceed with planned operations in Rafah and other parts of the Gaza Strip. This combination of Chinese economic growth and Middle Eastern turmoil propelled oil prices upward, underlining the market’s sensitivity to geopolitical tensions and demand dynamics.
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