New PoOil Slides Nearly 4%, Relinquishing War Premium Amid Federal Reserve Attentionst

Oil traders remained anxious about the outcome for October on Friday, thereby raising concerns.

WTI crude oil, traded in New York, closed at a price of $82.31 for December delivery, marking a decrease of $3.23, or 3.8%.

For the past week, the US crude benchmark has been fluctuating consistently, with increases or decreases of over 2% within a single session. This volatility is a result of the ongoing conflict between Israel and Hamas in the Gaza region, which has left markets uncertain and nervous.

WTI experienced a decline of 3.6% last week and is expected to end the month of October with a nearly 10% decrease as it currently stands.

The price of UK crude for delivery in December closed at $87.45, showing a decrease of $3.03, or 3.4%. In the previous week, the global standard for crude oil dropped by almost 2%. It is projected to finish October with a 9% decrease.

Traders are keenly following news about the war in the Middle East, especially after Israel carried out its long-awaited ground attack on Gaza over the weekend. According to Reuters, Israeli troops and tanks launched an attack on Gaza’s primary city from both the eastern and western sides of the Palestinian territory on Monday.

There has been no interruption of oil transportation in the Middle East.

However, experts stated that it was difficult to justify a higher price for crude oil due to the potential risks associated with the war, as there were no interruptions to the flow of oil in the surrounding waters.

John Evans, an oil broker from PVM, stated that market participants typically hold some oil positions going into weekends, anticipating potential conflicts. However, if the fear of conflict is not confirmed by Monday morning, these participants usually remove their protective measures.

Tina Teng, an analyst at CMC Markets (LON: ), agreed with the statement.

Even though the Hamas-Israel conflict had intensified, many people anticipated a ground invasion. However, the developments over the weekend indicate that there will be no additional spread of the war to other regions, resulting in a decrease in oil prices.

It is highly anticipated that the Federal Reserve will maintain interest rates at their current level throughout this week. However, officials have not completely ruled out the possibility of one more increase in rates before the year ends, particularly due to recent inflation figures surpassing expectations.

On Monday, the value of the currency remained stable, maintaining its recent increase while global demand for crude oil decreased, affecting its pricing in US dollars.

However, the most important economic data for this week will be the report for October, which will be released on Friday. Following a remarkably strong increase of 336,000 jobs in September, economists are predicting a more moderate growth of 182,000 jobs in October. Nevertheless, this number still indicates a strong and thriving labor market.

The is expected to remain at 3.8%, while wage growthThe anticipated decrease in inflation to 4% compared to the previous year is significant because it would be the lowest level since the pandemic. This development could support the Federal Reserve’s belief that inflationary pressures are diminishing, therefore eliminating the need for further interest rate hikes. This would also alleviate strain on economic growth in the largest consumer of oil globally.

Market observers will be examining Tuesday’s data on third-quarter employment costs to determine if there are indications that wage growth is slowing down, in anticipation of the upcoming data on Friday.

However, prior to the Federal Reserve meeting, the financial markets are also anticipating important purchasing managers index data from China. This data will provide further insight into the business activity of the largest oil-importing country in the world.

China’s economy has displayed some indications of steadying in the past few months following a significant decrease in growth. The nation’s aviation authority has recently announced plans to raise domestic flights to a level 34% higher than before the pandemic, which is seen as a positive indication for oil demand. However, it is important to note that air travel accounts for a small portion of China’s overall fuel consumption.

On Tuesday, the Bank of Japan is scheduled to have a meeting where there is speculation that the bank may make changes to its policies due to the challenge of increasing inflation.

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