Oil steady after weekly gain

August 12, 2024 (MLN): Oil steadied after posting its first weekly gain since early July, with the market still waiting for Iran’s response to last month’s assassination of a Hamas leader in Tehran.

Brent crude rose towards $80 per barrel after jumping 3.7% last week.

While West Texas Intermediate crude (WTI) was at $77.22 per barrel.

Tehran reiterated over the weekend its determination to punish Israel for the killing of Hamas’ political chief, as Iranian state media reported that a missile unit of the country’s military was conducting exercises near the Iraqi border, as reported by Bloomberg.

“The immediate market concern will be attacks on Iran’s oil supply and infrastructure” as the country accounts for about 4% of global oil production, said Vivek Dhar, an analyst with Commonwealth Bank of Australia. “We see Brent oil futures trading between $75 and $85 a barrel in the short term,” although upside risks remain over tensions in the Middle East, he said.

Crude has tracked a rebound in equity markets since sinking to a seven-month low at the start of last week, with a dour outlook in China, the biggest importer, also weighing on sentiment.

Traders will be looking to market reports for more clarity on supply and demand balances — with monthly outlooks due from OPEC on Monday and the International Energy Agency on Tuesday — as well as US inflation data on Wednesday.

Meanwhile, money managers have cut their net bullish positions on global benchmark Brent to the lowest in data going back to 2011, while they’ve flipped to a net-bearish position on diesel.

The physical market is also flashing warning signs with US refineries running slow as profit margins shrink.

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