Oil Steadies After Weekly Loss as Traders Monitor Trump Threats

Oil prices steadied on Friday after a significant weekly loss, as traders balanced geopolitical risks with positive economic indicators. Despite concerns about potential retaliatory attacks by Israel on Iran, which could disrupt Tehran's oil exports, traders also considered positive U.S. economic data and fiscal stimulus measures in China. The U.S. retail sales increase and China's central bank initiatives have helped alleviate some growth concerns, while the Energy Information Administration's (EIA) inventory data provided further support.



The U.S. retail sales data for September showed a slight increase, boosting consumer confidence and encouraging increased driving activity. This led to a decrease in U.S. crude oil, gasoline, and distillate inventories, as reported by the EIA. The resulting inventory decline drove up oil prices, with Brent and WTI futures gaining despite a 6% weekly loss.



China's stimulus measures, including the rollout of two funding schemes worth 800 billion yuan ($112.38 billion), have injected optimism into the global oil market. These measures aim to boost China's economy, the world's top oil importer, and could potentially increase demand for crude oil. However, the slow third-quarter economic growth and declining refinery output suggest that the impact on oil demand may not be immediate.

Geopolitical tensions, such as those between Israel and Iran, can significantly impact oil market volatility, despite positive economic indicators. The threat of a retaliatory attack by Israel on Iran, which could disrupt Tehran's oil exports, has been a key driver of oil price fluctuations. Although U.S. retail sales and China's fiscal stimulus have alleviated some growth concerns, market participants remain vigilant about potential supply disruptions. The Middle East tensions, coupled with the slowdown in China's refinery output, contribute to the uncertainty in the oil market.



In conclusion, the oil market is a complex interplay of geopolitical risks and economic indicators. Traders are balancing these factors to make informed investment decisions, as seen in the recent steadiness of oil prices after a significant weekly loss. While positive U.S. economic data and China's stimulus measures have provided some relief, geopolitical risks continue to play a crucial role in oil market dynamics. As the situation in the Middle East evolves, traders will remain vigilant about potential supply disruptions and their impact on oil prices.