OIL FUTURES: Crude prices firm amid rising geopolitical tensions

Crude oil futures were higher in midafternoon Asian trade Sept. 23 as Middle Eastern tensions continued to simmer, driving crude prices higher.

At 2:35 pm Singapore time (0600 GMT), the ICE November Brent futures contract was up 43 cents/b (0.58 %) from the previous close at $74.49/b, while the NYMEX November light sweet crude contract rose 45 cents/b (0.63%) at $71.45/b.

Geopolitical tensions between Israel and Hezbollah continued to escalate, with Hezbollah declaring an "open-ended battle" against Israel.

In the latest development in the conflict, Hezbollah launched a fresh volley of rockets into Israel, renewing concerns of an all-out war.

"The recent recovery in oil prices can also be attributed to the escalation in the conflict between Israel and Hezbollah," Priyanka Sachdeva, senior market analyst from Phillip Nova said, adding that elevated war risks, on top of the recent 50 basis points Federal Reserve interest rate cut, contributed to bullish prices.

Wider geopolitical tensions exerted further upward pressure on oil markets, threatening supply-side dynamics globally.

"Tensions in the Middle East remain high, while attacks on energy infrastructure in the Russia-Ukraine war are rising. This should keep the oil market tight in Q4 2024," ANZ Research analysts said.

Despite an observed recovery in global crude oil prices, some market analysts expect prices to soften moving forward.

"WTI crude oil prices continue their rebound from the low two weeks ago, though with the 50-day SMA (Simple Moving Average) still heading firmly lower the short-term downtrend is still intact," Chris Beauchamp, chief market analyst from IG Markets said.

Market analysts further cast doubt on the rosy picture following the Fed rate cuts, elaborating that gains in the market may be capped as recently released macroeconomic data left more to be desired.

"While both benchmarks settled with over 4% jump last week buoyed by Fed cuts optimism, the somber sentiments from mainland China, the world's largest importer of crude oil keep a lid on the upswing." Phillip Nova's Sachdeva added.

Dubai crude

Dubai crude swaps and intermonth spreads were higher in mid-afternoon Asian trading Sept. 23 from the previous close.

The November Dubai swap was pegged at $72.98/b at 2:00 pm Singapore time (0600 GMT), up 63 cents/b (0.87%) from the previous Asian market close.

The October-November Dubai swap intermonth spread was pegged at 73 cents/b, down 5 cents/b over the same period, and the November-December intermonth spread was pegged at 41 cents/b, down 1 cent/b.

The November Brent-Dubai exchange of futures for swaps was pegged at $2.07/b, down 5 cents/b.