Oil settles higher after Israeli attack on Qatar

Core Viewpoint - Oil prices increased following an Israeli military attack on Hamas leadership in Doha, Qatar, but gains were limited due to assurances from the U.S. and Qatar against further escalation in the region [1][2][3] Oil Price Movements - Brent crude futures rose by 37 cents (0.6%) to $66.39 per barrel, while U.S. West Texas Intermediate crude futures also increased by 37 cents (0.6%) to $62.63 per barrel [1] - Both benchmarks initially gained nearly 2% after the attack but later lost most of those gains [2] Geopolitical Context - The U.S. and Qatar have expressed a desire to avoid further escalation, and the muted response from other Gulf Cooperation Council members suggests that the risk of a broader regional conflict is contained [3] - Geopolitical risk premiums are currently easing rather than increasing [3] Supply and Demand Factors - The attack did not lead to immediate supply disruptions, which contributed to the paring of oil price gains [4] - Oil prices were already supported by a smaller-than-expected increase in OPEC+ output, expectations of continued oil stockpiling by China, and concerns over potential new sanctions against Russia [4] Market Sentiment - The U.S. Energy Information Administration anticipates significant pressure on global crude prices in the coming months due to rising inventories [5] - Physical oil markets are showing signs of weakness, with prompt spreads in the Atlantic basin weakening, indicating weak demand [5] Inventory and Economic Indicators - U.S. crude oil inventories reportedly rose last week, as per the American Petroleum Institute [6] - Traders are anticipating a potential interest rate cut by the Federal Reserve, which could stimulate economic growth and increase oil demand [7]