Oil prices jumped Wednesday as a blast at a Gaza hospital aggravated tensions in the Middle East region, fuelling worries over potential supply disruptions.
Brent crude futures rose 1.8% to $91.5 a barrel as of 11:00 am GST, while the US West Texas Intermediate (WTI) crude gained 1.9% to $88.3 per barrel around the same time.
Following the hospital explosion, leaders of Jordan, Egypt, and the Palestinian Authority canceled a summit with US President Joe Biden, complicating the American efforts to prevent the Israel-Palestine conflict from spreading across the Middle East. Biden is set to visit Israel on Wednesday.
"The cancellation of a summit between Biden and Arab leaders reduces the likelihood of a diplomatic solution to the Israel-Hamas conflict," Vivek Dhar, an analyst at the Commonwealth Bank of Australia, said in a client note cited by Reuters.
Brent closed 0.1% lower at $89.54 a barrel Tuesday, while the WTI crude fell 0.2% at $86.45, on hopes that the US could ease its sanctions on Venezuela.
US crude stocks declined by about 4.4 million barrels in the week ending October 13, according to market sources cited by American Petroleum Institute figures Tuesday. Official government data is scheduled to be released on Wednesday.
On the demand side, China's economy grew 4.9% in the third quarter, official data showed Wednesday, backed by recent policy measures that are helping to bolster the country's recovery.
The growth came more than analysts' expectations in a Reuters poll for a 4.4% increase but slower than the 6.3% expansion in the second quarter. But analysts are still cautious about China's economic growth as the real estate sector is still a hurdle.
China's official data also showed that the country's oil refinery throughput in September reached a record daily rate, a rise of 12% from a year earlier, as refiners raised run rates to meet robust demand for transport fuel over the Golden Week holiday and improving manufacturing.
"The September data likely guarantee that China will hit its 'around 5%' growth target this year. That said, it will struggle to better it. The economic recovery is still in its infancy," Moody's Analytics economist Harry Murphy Cruise said in a note cited by Reuters.
Meanwhile, US retail sales rose 0.7% in September, higher than expected, fueling expectations of another interest rate hike by the Federal Reserve by year-end to curb inflation. But this can slow economic growth and reduce oil demand.
