April 08, 2024 (MLN): Oil prices took a breather on Monday after surging to a five-month high, following early signs of easing geopolitical tensions.
Brent crude traded near $89.76 per barrel, down by 1.55% on the day.
While West Texas Intermediate crude (WTI) was at $85.61 per barrel, down by 1.50% on the day.
Israel said it would remove some troops from Gaza, as traders wait for a series of market reports this week that will provide a snapshot on supply and demand, as Bloomberg reported.
Oil has rallied recently on escalating geopolitical tensions and supply shocks, raising the prospect of the global benchmark reaching triple figures.
Israel said on Sunday that the country is pulling some troops from southern Gaza, as Prime Minister Benjamin Netanyahu said victory was within reach.
Still, Iran continued to prepare a response to a suspected Israeli attack on its consulate in Syria, while Hezbollah warned that it’s ready for war.
“The concession of moving troops out of Gaza is nowhere near cause to discount ongoing threats of more direct conflicts involving Iran,” said Vishnu Varathan, Asia head of economics and strategy at Mizuho Bank Ltd. in Singapore.
“Oil’s upside volatility remains very much present, and that’s to a large part thanks to geopolitics amplifying supply shortfalls elsewhere,” he added.
Crude posted a fourth weekly gain on Friday, the best run since August, but the rapid rally higher has presented some technical resistance.
Brent surged into overbought territory on the 14-day relative strength index, adding short term headwinds to the global benchmark.
The broader outlook remains bullish, with a slew of indicators pointing to an upward trend for prices. Timespreads are strong, volatility has recovered, and funds are going long on crude.
Bullish oil call options, which profit when prices gain, are still trading at a premium to oppositely bearish puts.
Looking ahead, the US Energy Information Administration is scheduled to release its Short-Term Energy Outlook on Tuesday.
That will be followed by reports from OPEC and the International Energy Agency later in the week.
The raft of data and commentary will aid in shaping the outlook for global oil balances. OPEC+ cuts are coinciding with supply outages from producers like Mexico and ongoing disruptions in the Red Sea due to Houthi attacks on shipping.
Russian and Venezuelan flows are also in focus as the US steps up enforcement of sanctions.
Copyright Mettis Link News
Posted on: 2024-04-08T09:34:58+05:00
