Crude oil futures edged higher in midmorning Asian trade Feb. 5 after posting a weekly loss of nearly 7%, but focus remained on growing tensions in the Middle East after US forces conducted multiple strikes over the weekend.
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Register NowAt 11:23 am Singapore time (0323 GMT), the ICE April Brent futures contract was up 21 cents/b (0.27%) from the previous close at $77.54/b, while the NYMEX March light sweet crude contract rose 11 cents/b (0.15%) at $72.39/b.
International crude oil benchmarks were lower in the week to Feb. 2, with the front-month ICE contract plunging 7.44% on the week to settle at $77.33/b, the lowest since Jan. 10 at $76.80/b. The front-month NYMEX light sweet crude contract was 7.35% lower at $72.28/b, the lowest since Jan. 11 at $72.02/b.
The geopolitical concerns remain elevated after US forces destroyed seven more anti-ship cruise missiles in Houthi-controlled areas of Yemen on Feb. 3 and 4.
The latest strikes came just hours after armed forces from the US, UK, Australia, Bahrain, Canada, Denmark, the Netherlands and New Zealand conducted hits against 36 Houthi targets at 13 locations in Iranian-backed Houthi areas of Yemen that allegedly were used to strike ships in the region, US CENTCOM said Feb. 3 on X.
"[Oil] prices were firmer this morning in early Asia with US forces launching attacks against the Houthis in Yemen over the weekend and Houthis vowing to respond," SAXO's APAC strategy team said Feb. 5.
Meanwhile, reports of constructive ceasefire talks between Israel and Hamas also weighed on sentiment. However, analysts remained unconvinced that it would come to fruition.
"Hopes of a ceasefire between Israel and Hamas drove some of this weakness. However, for now, a ceasefire does not appear imminent," ING analysts Warren Patterson and Ewa Manthey said Feb. 5.
Japan's services PMI extends growth
In economic news, the headline au Jibun Japan Services PMI rose to 53.1 in January compared to 51.5 the month prior, extending its consecutive growth streak to 17 months, S&P Global said in a statement released Feb. 5. The reading was above the 50 threshold, which separates expansion from contraction.
"The latest PMI data painted a stronger picture for growth across the various segments," Usamah Bhatti, economist at S&P Global Market Intelligence said, adding that "both business activity and new orders rose at faster rates, while exports rose increased for the first time in five months."
Crude Swaps
Dubai crude swaps and intermonth spreads were lower in midmorning trade in Asia Feb. 5 from the previous close.
The April Dubai swap was pegged at $76.67/b at 10 am Singapore time (0200 GMT), down $1.39/b (1.78%) from the Feb. 2 Asian market close.
The March/April Dubai swap intermonth spread was pegged at 45 cents/b at 10 am, down 7 cents/b over the same period, and the April/May intermonth spread was pegged at 42 cents/b, down 5 cents/b.
The April Brent/Dubai EFS was pegged at 85 cents/b, down 20 cents/b.