SINGAPORE, November 4 ------ Oil prices were little changed on Friday but headed for a second week of losses as supply fears driven by conflict in the Middle East, a key producing region, eased, while the demand outlook at the world's top crude importer China remains clouded.
Brent crude futures rose 29 cents, or 0.3%, to $87.14 a barrel by 0505 GMT, while U.S. West Texas Intermediate crude futures gained 36 cents, or 0.4%, to $82.82 a barrel. "Oil prices have managed to ride on the improved risk environment higher, as markets continue to bask in the hopes that the Fed is likely done with its rate hiking process," said Yeap Jun Rong, market strategist at IG. "Nevertheless, there are still some reservations around oil demand outlook this week as China's PMI did not provide much conviction of a demand revival in place," Yeap added. China's manufacturing activity unexpectedly contracted in October. The official purchasing managers' index (PMI) fell to 49.5 in October from 50.2, dipping back below the 50-point level demarcating contraction from expansion, data from the National Bureau of Statistics showed on Wednesday.
On Friday, a private sector survey showed China's services activity expanded at a slightly faster pace in October, but sales grew at the softest rate in 10 months and employment stagnated as business confidence waned. Meanwhile, geopolitical concerns remained in focus, as Israeli forces on Thursday encircled Gaza City - the Gaza Strip's main city - in their assault on Hamas, its military said, but the Palestinian militant group resisted their drive with hit-and-run attacks from underground tunnels.
The White House said it was exploring a series of pauses in the Israel-Hamas conflict to help people safely exit Gaza and allow humanitarian aid to get in. Both benchmarks gained more than $2 a barrel on Thursday, though Brent was on track to post weekly losses of about 4% as of Friday, while WTI looked set to close lower by 3% from last week. The U.S. Federal Reserve held interest rates steady on Wednesday, while the Bank of England held interest rates at a 15-year peak. The stable rates kept oil prices supported as some risk appetite returned to markets. On the supply side, top oil exporter Saudi Arabia is expected to reconfirm an extension of its voluntary oil-output cut of 1 million barrels per day through December, based on analyst expectations. Meanwhile, U.S. oil rig count data is expected later in the day and will serve an indicator of future production.
Source: reuters.com
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