Crude hits two-month highs, Brent nears $87/b

Quantum Commodity Intelligence – Crude oil futures in after-hours trading in Asia were consolidating to near two-month highs on Friday as geopolitical tensions and demand optimism underpinned gains.

First month August 24 ICE Brent futures were trading at $86.87/b (0700 GMT), compared with Thursday’s settlement of $86.39/b. The more liquid it traded Sep24 at $85.75/b.

At the same time, August 24 NYMEX WTI trade at $82.26/bfrom Thursday’s settlement of $81.74/b.

Concerns about an escalation in the Israel-Hezbollah conflict and an oil shortage in 2H 2024 sent markets reeling from midweek volatility, coming after US inventory data showed crude stockpiles rising and gasoline.

“Prices appear to be shaking off some dodgy data from the EIA and even reports that China’s crude oil imports are hitting a five-year low due to rising geo-political risk and indicate that the upward trend in global demand, which will peak historically, the oil market will tighten significantly later in the coming months,” said Phil Flynn of The Price Futures Group.

Aug24 Brent rose about 7% on the month, with improved refining margins this week also supporting crude markets.

Meanwhile, weather watchers were monitoring the weather system in Atlantic Invest 95L, which has a good chance of becoming a tropical depression or tropical storm this weekend and taking the name Beryl.

Traders were also eyeing a key inflation report on Friday that could influence the timing of the Federal Reserve’s next move on interest rates.

The core PCE price index, which excludes volatile food and energy prices, is seen as the favorite measure of inflation in terms of the Fed’s stance.