Israel Vowing Revenge Against Hamas Ignored By Traders, Oil Sheds $2

Debatable Russian/Ukraine peace progress also contribute to "risk-off" tone: File Image/Pixabay

Despite sabre rattling from Israel regarding Hamas returning deceased hostages, oil traders on Friday perceived the Middle East to be in a relative state of peace; and this combined with hopes for peace between Russia and Ukraine resulted in crude shedding more than $2 on Friday – and contributing to a weekly loss.

Brent settled down $2.05, or 2.6 percent, to $74.43 per barrel, while West Texas Intermediate settled down $2.08, or 2.8 percent, to $70.40.

For the week, Brent was 0.4 percent lower, and WTI was 0.5 percent lower.

John Kilduff, founding partner at Again Capital, cited the Gaza ceasefire when he remarked, "There is a risk-off tone here" – with oil traders apparently shrugging off Israeli prime minister Benjamin Netanyahu vowing on Friday that Hamas will pay "the full price" for allegedly murdering two Israeli child hostages and returning an unidentified body instead of a specific deceased hostage as promised.

As evidenced by Friday's trading, they also seemed not overly concerned by reports of deteriorating relations between U.S. president Donald Trump and Ukraine president Volodymyr Zelenskiy, possibly because the latter recently said Ukraine was willing to work with the U.S. to produce agreements on investments and security.

Kilduff theorized, "Trump keeps hammering Ukraine and the market is taking that as a potential easing of sanctions on Russia, and Russian oil flows coming back to the market."

But what the market perceives and what policy-makers intend are often two different things, and U.S. secretary of state Marco Rubio told European leaders on Friday that Washington will in fact not lift any sanctions against Russia unless it sees a noticeable change in behaviour from Moscow.

Bloomberg on Friday offered a different take on the crude market, noting that "Crude has been trapped in a roughly $5 range for the past three weeks because of an uncertain outlook for supply, including increasing expectations that OPEC+ will delay a planned production increase, and a drone attack that threatened Kazakh pipeline flows."

The news agency was referring to speculation that the Organization of the Petroleum Exporting Countries may postpone its 120,000 barrel per day (bpd) output increase that is scheduled to begin in April – a scenario Citigroup Inc. analysts regard as entirely possible, "Given prices in the mid-$70s."