Oil Ends Week With Modest Gains As Israel Strikes Lebanon

But analysts remain largely unimpressed by the commodity's performance:File Image/Pixabay

Oil ended a week of largely range bound and rudderless trading by ending slightly higher on Friday, pushed by Middle East hostilities but capped by a strong U.S. dollar.

Brent settled up 49 cents to $89.50 per barrel, while West Texas Intermediate settled up 28 cents to $83.85 per barrel.

The geopolitical tensions resulted from Israel's air force striking in Lebanon's West Beqaa district, killing two militants who had helped carry out attacks against Israel.

Tim Snyder, chief economist at Matador Economics, said, "The geopolitical element is not over, the proxy battles going on right now will continue."

In addition to the strong U.S., dollar, crude's gains were limited by reports of inflation rising in the U.S. in March, on the heels of data showing weaker than expected economic growth and traders' hopes for a timely reduction of rates from the Federal Reserve  fading.

In the 12 months through March, U.S. inflation rose 2.7 percent after posting a hike of 2.5 percent in February.

Still, crude has advanced in 2024, although Bloomberg warned that concerns remain: "A sharp drop in returns from making diesel is prompting some Asian refiners to make modest reductions in operating rates, which could crimp regional oil imports; analysts have meanwhile forecast a decline in margins for making the fuel in Europe."

John Kilduff, founding partner at Again Capital, said of Friday's session, "The economic data this morning was enough for market participants to conclude that the Fed is not going to be forthcoming with interest rate cuts any time soon.

"Geopolitical jitters in the market are what is keeping us aloft; those two competing forces should keep us in check."

For his part, Michael Kern, analyst at Safehaven.com, wasn't impressed; he wrote, "Even if headed towards the first weekly gain since early April, oil prices have so far failed to break out above the psychologically important $90 per barrel mark."