Oil Falls in Choppy Session on Risk Off Sentiment

by Bloomberg | Julia Fanzeres
click here to read this article at Rigzone.com
*this article was not written by Roseland Oil & Gas

Oil edged lower after a choppy session as broader risk-off sentiment dampened reduced crude production in North Dakota and Red Sea risks. 

West Texas Intermediate futures fell 0.4% to settle near $72 a barrel, with a stronger dollar making the commodity more expensive for overseas buyers. Earlier in the session, prices rose as output at the second-largest US shale basin was cut by as much as 650,000 barrels a day and Houthi rebels ramped up their attacks. Still, prices remain in rangebound trading, swinging almost $2 on Tuesday, as traders assessed fundamentals. Brent futures settled slightly higher.

While the strikes have prompted Shell Plc to suspend all shipments through the area, physical crude supplies remain unaffected. Chevron Corp. Chief Executive Officer Mike Wirth told Bloomberg Television Tuesday the company has not made “fundamental” changes to shipping routes.

The Israel-Hamas conflict saw a war-risk premium built into crude, but that faded after a couple of weeks. The US-led attack on Houthi targets last week, in retaliation for continued strikes on vessels, has ratcheted up tensions. The main concern is Iran getting pulled directly into the conflict, but oil markets seem to be discounting that possibility.

While no production in the region has been lost, the diversions are “indirectly tightening the market by forcing oil stocks on water” to pile up, Citigroup Inc. said in a note. Still, “it is not our base case that US/UK strikes on Houthi targets in Yemen and issues in the Red Sea will lead to a substantive upside.

Prices:

• WTI for February delivery fell 28 cents to settle at $72.40 a barrel in New York.
  • Futures didn’t settle Monday because of a US holiday.
• Brent for March settlement rose 14 cents to settle at $78.29.

by Bloomberg | Julia Fanzeres
click here to read this article at Rigzone.com
*this article was not written by Roseland Oil & Gas