OIL FUTURES: NYMEX WTI jumps 4.3% amid US stock draw, rising Middle East tensions

Crude oil futures settled sharply higher July 31 on the heels of continued US inventory draws and concerns of that the killing of Ismail Haniyeh, a top Hamas leader, in Iran would portend a fresh escalation in geopolitical tensions in the Middle East.

NYMEX September WTI settled $3.18 higher at $77.91/b and ICE September Brent climbed $2.09 to $80.72/b.

Haniyeh was killed in Tehran in a raid conducted by Israel, Hamas said in a statement July 31, raising worries about a wider regional conflict and dimming hopes for a cease-fire between Israel and Hamas. Haniyeh was in Iran to attend the inauguration of the country's new president Masoud Pezeshkian.

"That obviously strip away the hopes of cease-fire," said Priyanka Sachdeva, senior market analyst at Phillip Nova, referring to the assassination. "Markets hoped that [peace] negotiations attempts will finally turn fruitful and diluted the war premiums from oil prices in recent weeks."

Israel has yet to confirm or deny its involvement on the killing of Haniyeh.

Reports of the attack in Tehran came on the heels of an Israeli airstrike in Lebanon July 30 that killed a senior leader of Hezbollah.

With a cease-fire seemingly off the table, Israel may continue fighting on multiple fronts including confrontations with Hezbollah, Houthi rebels, along with its ongoing war with Hamas, iFAST Financial Senior Portfolio Manager You Weiren said.

"The risk of further escalations is fast rising. A destabilized Middle East means oil prices will likely remain elevated," You said.

NYMEX August RBOB climbed 9.49 cents to $2.4820/gal and August ULSD settled 7.87 cents higher at $2.4155/gal.

Seasonal US crude draws extend

US commercial crude stocks fell 3.44 million barrels to 433.05 million barrels in the week to July 26, US Energy Information Administration data showed July 31. The draw was in line with seasonal norms, but came in below market expectations.

American Petroleum Institute data released late July 30 showed a 4.5 million barrel crude draw in the week to July 26, while analysts surveyed by S&P Global Commodity Insights July 29 had forecast a 2.7 million barrel decline over the period.

US refinery crude demand unexpectedly slipped 260,000 b/d to 16.15 million b/d, EIA data showed, and was the weakest since early May.