Oil Dips As Middle East Tensions Fail To Impact Trading - For Now

by Ship & Bunker News Team
Monday April 22, 2024

Oil on Monday dipped as jittery traders began to take faith in reports that crude supplies have to date not been affected by the Middle East hostilities, and that fundamentals are shaping up to be strong going into summer.

Brent settled down 29 cents at $87.00 per barrel, while West Texas Intermediate settled down 29 cents at $82.85 per barrel.

Tamas Varga of PVM pointed out that the price escalations of crude in previous sessions are unlikely to occur again in the absence of actual supply/production issues, and other analysts noted that existing spare capacity from several oil-producing companies could fill the gap even if disruptions occur down the road.

For his part, Jorge Leon, analyst at Rystad Energy, stated that "Barring a significant escalation in the Middle East, the geopolitical risk premium will stabilize and gradually decrease."

Meanwhile, Tina Teng, an independent market analyst, told media that economic concerns are contributing to an overall bearish sentiment in the crude market thanks to last week's announcement of a substantial build in U.S. stockpiles and the Federal Reserve's unwillingness to lower interest rates any time soon resulting in a strong U.S. dollar.

Rebecca Babin, a senior energy trader at CIBC Private Wealth, offered a markedly different perspective by stating, "Buyers are waiting to see if crude will hold its 50-day moving average before increasing exposure; bullish sentiment has been burning hot into summer and many investors are already long heading into the summer driving season, leaving less ammunition to buy the dip on a sell off."

Bloomberg in a similar vein stated, "with the U.S. Congress moving to sanction Iran's oil sector and the conflict between Israel and Iran remaining tense, prices may continue to see sharp swings."