In a nuanced interplay of market sentiment, oil prices exhibited a modest retreat on Tuesday, seemingly allaying apprehensions over potential supply disruptions stemming from the ongoing Israel-Hamas conflict, while maintaining a vigilant watch.
Brent crude saw a dip of 47 cents, settling at $87.68 per barrel as of 11:35 CDT (1635 GMT), with its American counterpart, US West Texas Intermediate (WTI) crude, following suit with a 42-cent decrease, resting at $85.92 per barrel. Notably, both benchmarks had incurred losses of over $1 earlier in the trading day.
Phil Flynn, a seasoned analyst at Price Futures Group, aptly described the market’s current disposition as a “ping pong game of fear-on, fear-off,” deviating from the conventional influence of fundamental factors.
Monday witnessed an abrupt surge of more than $3.50 in both Brent and WTI, largely in response to escalating military conflicts, which aroused concerns regarding the potential expansion of hostilities beyond Gaza. Fiona Cincotta, a senior financial markets analyst with City Index, remarked, “After solid gains in the previous session, exceeding 4 percent, the oil markets have adopted a cautious stance, witnessing a marginal regression.”
Cincotta also observed that, for the time being, the market appears to be of the belief that oil flows will remain largely unimpeded, with no substantial evidence supporting a significant reduction in oil exports. Energy analyst Vivek Dhar, of CBA, emphasized that any revelation of Iranian involvement could exert upward pressure on prices.
Dhar further shared his perspective, stating, “We maintain our belief that Brent oil will ultimately stabilize within the range of $90-$100 per barrel in the fourth quarter of 2023.” He also underscored that the Palestine-Israel conflict introduces the latent risk of Brent futures reaching the remarkable threshold of $100 per barrel and beyond.
By Reuters
