New Tesla Truck and Saudi/Israeli Alliance Seen as Latest Risks to Crude Market

Analysts see a number of new risks for oil this week. File Image / Pixabay

U.S. crude on Friday rose by 2.6 percent, compensating for much of the week's losses - but while this seems to indicate that trader concern over reports of oversupply has diminished, other issues that herald continued market volatility include growing ties between Saudi Arabia and Israel, and a new electric truck said to have groundbreaking battery life.

West Texas Intermediate settled up $1.41 to $56.55 per barrel and Brent rose $1.23 to $62.59 per barrel, causing Tamas Varga, analyst at PVM Oil Associates, to remark, "After five days of continuous losses, an upside correction is always on the cards; such a jump, however will not mean a change of heart."

PVM added, "Upside potential is being capped by oversupply concerns fueled by the surge in U.S. crude production."

While the U.S. is  the fly in the ointment for everything from jittery traders to those trying to lay blame for the Organization of the Petroleum Exporting Countries' production cutbacks not having wiped out the global crude glut, presumably the market will soon focus attention on the growing ties between the Saudis and Israelis.

The unlikely liaison is the result of Lt. General Gadi Eisenkot, Chief of Staff of the Israel Defense Forces, telling media the two countries have "many common interests" and that his country is ready to share information with the Saudis if necessary; Jake Novak, senior columnist for CNBC, points out that this will surely cause tension among Middle Eastern factions and "could be an ominous sign that war is coming" between the Saudis and Iran.

Also, depending if its performance lives up to its hype, Tesla Inc's new electric truck could be a major blow to worldwide oil demand: the company's first all-electric, long-range semi-truck was unveiled this week in Hawthorne, California, and is said to have a 500-mile range and lower lifetime costs than diesel vehicles, which have been responsible for about 60 percent of the increase in global diesel demand since 2000.

Earlier this week, Rob Rhummel, portfolio manager at Tortoise Capital Advisors, said everything from Venezuela's humanitarian crisis to the potential resumption of sanctions against Iran could "endanger supply that potentially pushes [crude] prices higher" than their current levels.