U.S. crude oil on pace to eke out second weekly gain on Middle East war risk

U.S. crude oil on Friday was on pace to eke out its second weekly gain in a row as Israel prepares to retaliate against Iran.

The U.S. benchmark and global benchmark Brent are ahead about 1% this week. Oil prices have gained more than 10% through Thursday's close since Iran hit Israel with ballistic missiles last week.

"Nevertheless, sustaining bullish price momentum in oil has proven to be a high maintenance task: without additional catalysts, the 'war' and 'stimulus' premiums have shown easy susceptibility to fading," Natasha Kaneva, head of global commodity strategy at JP Morgan, told clients in a Friday note.

Here are Friday's energy prices:

• West Texas Intermediate November contract: $75.31 per barrel, down 54 cents, or 0.71%. Year to date, U.S. crude oil has gained about 5%.
• Brent December contract: $78.91 per barrel, down 49 cents, or 0.62%. Year to date, the global benchmark has increased more than 2%.
• RBOB Gasoline November contract:  $2.151 per gallon, little changed. Year to date, gasoline is ahead more than 2%.
• Natural Gas November contract: $2.639 per gallon, down 1.35%. Year to date, gas has risen nearly 5%.

Israel's security cabinet met Thursday to discuss the country's response to Iran's attack, according to media reports. President Joe Biden and Prime Minister Benjamin Netanyahu spoke by phone on Wednesday.

Traders have worried that Israel will hit Iran's oil industry, potentially triggering a cycle of escalation that causes a significant disruption of supplies in the Middle East. Biden has discouraged Israel from targeting Iran's oilfields. The Arab Gulf states have also reportedly lobbied the White House to pressure Israel to refrain from hitting Iranian energy infrastructure.

"We expect that the White House is potentially encouraging Israel to target refineries instead of oil export facilities, arguing that the economic impact would be more directly felt by Iran," Helima Croft, head of global commodities strategy at RBC Capital Markets told clients in a Thursday note.

Croft warned, however, that the U.S. influence may have waned since April, when Israel's response to Iran's first missile and drone attack was relatively muted.