Oil prices are on track to record a monthly decline as concerns about a larger-scale Israel-Hamas conflict diminish

Oil futures rebounded on Friday after a more than 3% drop in the previous session. However, they are still poised for monthly losses due to a decrease in the risk premium associated with concerns that the Israel-Hamas conflict could disrupt oil supplies.

In price movements:

• West Texas Intermediate crude for December delivery (WTI) increased by 47 cents, or 0.6%, reaching $82.78 per barrel on the New York Mercantile Exchange. WTI prices have declined by more than 9% for the month, as of Monday's settlement.
• December Brent crude, the global benchmark, rose by 49 cents, or 0.6%, to $87.94 per barrel on ICE Futures Europe. Brent prices were down over 8% for the month as of Monday. The most actively traded January Brent contract was up by 27 cents, or 0.3%, at $86.62 a barrel.
• November gasoline increased by 1% to $2.241 per gallon, while November heating oil rose by 1.4% to $3.0085 per gallon.
• December natural gas gained 5.4% to $3.532 per million British thermal units. Front-month natural gas prices were down by over 14% for the month as of Monday.

In terms of market drivers:

Oil traders are closely monitoring the situation in the Middle East. They are currently in a "wait-and-see" mode, looking for clear signs of a significant escalation that could disrupt the oil supply before pushing prices higher. It's worth noting that WTI has largely erased its gains since the October 7th attack on southern Israel by Hamas, while Brent has also reduced its gains since the beginning of the conflict, despite ongoing risks of a broader conflict.

At the time of writing on October 31, 2023, Brent was trading at US$86/bbl., and WTI was trading at US$82/bbl.