Oil Prices Speculated to Drop as Middle East Crisis Eases

Oil prices rose on Oct 27, regaining ground after falling more than $2 per barrel the previous session, as fears of a wider Middle East conflict abated and the United States, the world's largest oil consumer, showed signs of weakening demand. Brent crude futures were up 45 cents, or 0.5%, to $88.38 a barrel by 0019 GMT, while West Texas Intermediate was up 42 cents, or 0.5%, to $83.63 a barrel.

Both contracts are on track for their first weekly drop in three weeks, as the geopolitical premium built on fears that the Israel-Gaza conflict would involve more Middle Eastern countries and disrupt oil supply has diminished.

"As a trader, I'd have to say we're somewhat out of our league here - trying to ascribe a value to geopolitics when no meaningful supply has been disrupted outside of the Levant," said Kelvin Yew, senior oil trader at Ocean Leonid Investments.

Overnight, Israeli forces launched their largest ground attack on Gaza in their 20-day war with Hamas, infuriating the Arab world.

Prime Minister Benjamin Netanyahu stated that Israeli troops were still preparing for a full ground invasion, while the US and other countries urged Israel to postpone the invasion, fearing it would spark conflict on other Middle Eastern fronts.