Singapore, Oct. 2014 -Oil retreated on Friday after settling higher the previous day, but prices remained set for a second weekly gain as investors weighed the impact of hurricane damage on U.S. demand against any broad supply disruption if Israel attacks Iranian oil sites.
Brent crude oil futures fell 94 cents, or 1.2%, to $78.46 a barrel by 0650 GMT. U.S. West Texas Intermediate crude futures slipped 86 cents, or 1.1%, to $74.99 per barrel.
For the week, both benchmarks were headed for gains.
“Oil prices continue to extend (their) run week-on-week, with geopolitical risks fuelling the rebound,” said Yeap Jun Rong, market strategist at IG. But he added that reservations over high crude inventories and a possibly more gradual easing of the U.S. Fed rate have put the recent rally on hold.
In the United States, Hurricane Milton plowed into the Atlantic Ocean on Thursday after cutting a destructive path across Florida, killing at least 10 people and leaving millions without power.
The destruction could dampen fuel consumption in some areas of the world’s largest oil producer and consumer.
“Investors are evaluating how hurricane damage might impact the U.S. economy and fuel demand,” said Hiroyuki Kikukawa, president of NS Trading, a unit of Nissan Securities.
“Oil prices are likely to hover around the current 200-day average levels, with the primary concern being whether Israel will retaliate against Iranian oil facilities,” he said.
The 200-day average for Brent is at $81.68 a barrel and at $77.36 for WTI.
Crude benchmarks spiked this month after Iran launched more than 180 missiles against Israel on Oct. 1, raising the prospect of retaliation against Iranian oil facilities. Israel has yet to respond, and crude benchmarks have eased and remained relatively flat through the week.
Israeli Defence Minister Yoav Gallant, however, has said that any strike against Iran would be “lethal, precise and surprising”.
Iran is backing several groups fighting Israel, including Hezbollah in Lebanon, Hamas in Gaza and the Houthis in Yemen.
In Lebanon, Israeli strikes on central Beirut on Thursday night killed 22 people and wounded at least 117, Lebanon’s health ministry said. Lebanese security sources said at least one senior Hezbollah figure was also targeted in the attacks. (Reuters)
