Investing.com-- Oil prices rose sharply in Asian trade on Thursday after Israel harshened its rhetoric against Iran, while focus turned to upcoming business activity data from several major economies due in the coming days.
Crude prices were nursing two weeks of steep losses amid heightened concerns over slowing demand. While they made some positive moves this week, overall gains were still limited.
Prices also fell on Wednesday after U.S. inventory data showed a bigger-than-expected build in crude stockpiles.
Brent oil futures expiring in December rose 1% to $75.72 a barrel, while West Texas Intermediate crude futures rose 1.1% to $71.57 a barrel by 21:24 ET (01:24 GMT).
Israeli defense minister touts Iran strike
Traders were positioning for an escalation in Middle East tensions after Israeli Defence Minister Yoav Gallant told air force crews that the world would understand Israel’s strength after striking Iran.
His comments were made amid growing anticipation of a strike against Iran in retaliation for an October 1 attack, which was Tehran’s second major attack on Israel in six months.
Fears of an escalation in the conflict have been a key driver of oil prices in recent months, with traders attaching a risk premium to crude on fears that Israel could attack Iran’s oil and nuclear infrastructure.
Israel also ramped up its offensive against Hamas and Hezbollah this week, prompting retaliation from the two military groups.
The escalation in the conflict comes despite a bigger push from the U.S. to broker peace in the Middle East before a November 5 presidential election, which is likely to alter U.S. policy in the region.
But chances of a ceasefire appear slim.
US, EU PMIs in focus
Focus on Thursday was also on key purchasing managers index readings from the euro zone and the U.S., for more cues on the state of the world’s biggest economies.
Eurozone activity is expected to have remained in contraction, while U.S. activity is expected to be buoyed by strength in the services sector.
Any more signs of resilience in the U.S. economy are likely to further bets on a slower pace of interest rate cuts by the Federal Reserve- a notion that has dented oil markets in recent weeks.
Strength in major global economies also presents a brighter outlook for crude demand, although sluggish growth in top oil importer China is likely to offset this trend.