Oil futures fell on Monday, pulling back after a rally that saw Brent and West Texas Intermediate crude close last week at their highest levels for February as tensions in the Middle East escalated.
The price moves
-
WTI CL00
+0.12%
For delivery on March CL.1,
+0.12% CLH24,
+0.12%
Crude oil futures fell 12 cents, or 0.2%, to $76.72 a barrel on the New York Mercantile Exchange. -
Brent crude oil for April BRN00,
-0.16% BRNG 24,
-0.16% ,
The global index fell 17 cents, or 0.2%, to $82.02 a barrel on the ICE Futures Europe exchange. -
March gasoline RBH24,
+1.16%
It added 0.9% to $2.3605 per gallon, while the March HOH24 heating oil price rose,
-1.23%
It lost 1.1% to $2.9301 per gallon. -
Natural gas delivery in March NGH24,
-0.22%
It traded at $1.842 per million British thermal units, down 0.3%.
Market driving factors
Brent and West Texas Intermediate crude rose more than 6% last week, with gains linked to concerns about a potential escalation of the war between Israel and Hamas. But concerns appear to have subsided somewhat as the week begins, Ewa Manthey and Warren Patterson, commodities strategists at ING, said in a note.
Iran's foreign minister said over the weekend that Tehran held talks with Saudi Arabia about a political solution to the hostilities in Gaza, Reuters reported, and exchanged letters with the United States throughout the four-month war between Israel and Hamas.
While there is still “little potential for a ceasefire, the situation is tense, which will keep oil prices highly volatile and vulnerable to major risks,” Fawad Razaqzadeh, a market analyst at City Index and Forex.com, said in a note to clients.
““The extent to which the risk premium applies to the situation in the Middle East remains uncertain, as oil supplies have not been significantly affected by the crisis…” “
“The extent to which the risk premium should be applied to the situation in the Middle East remains uncertain, as oil supplies have not been significantly affected by the crisis, except for minor disruptions such as the rerouting of ships around the African continent,” he said. Therefore, even in the event of a ceasefire, he estimates that the downside risks to oil will be “limited” to around 5% to 7%.
Meanwhile, analysts said trading volumes were relatively weak due to the Lunar New Year holiday, which closed Chinese markets.
Monthly oil reports are scheduled to be issued from the Organization of the Petroleum Exporting Countries on Tuesday, and from the International Energy Agency on Thursday.
“Attention will be paid to how they revise their demand forecasts in response to global developments,” Ipek Ozkardskaya, senior analyst at Swissquote Bank, said in a daily note.
On the one hand, she said, “The strong US economy and Chinese stimulus measures are positive for demand dynamics and should support oil prices beyond geopolitical tensions.” On the other hand, “the significant decline in expectations for a reduction in global interest rates affects the outlook for global demand.”
One thing is certain, Ozkardskaya said, and that is that OPEC “will continue to fight to maintain oil prices, even as the United States pumps a record amount of oil to offset the price increases that OPEC desperately needs.”
