Oil Drops Amid Supply And Equity Jitters
by Bloomberg | Mia Gindis, Alex Longley
click here to read this article at rigzone.com
*this article was not written by Roseland Oil & Gas
Oil slid as risk-averse sentiment pervaded global markets and investors digested fresh developments in US-Iran tensions that continue to cloud the supply outlook.
West Texas Intermediate fell 2.8% to end the day below $63 a barrel, as equities weakened amid concerns over technology profits. US President Donald Trump said negotiations with Iran over its nuclear program could stretch for as long as a month, but it would be “very traumatic” for Tehran if it failed to reach an agreement. Traders remain concerned about the potential for military strikes and risks to supply from the Middle East.
Crude has gained every week this year, with a single exception, as geopolitical risks and supply disruptions drove futures higher. The US intervened in Venezuela in January, then pivoted to Iran after a wave of protests challenged the Islamic Republic’s leadership. A vast hoard of sanctioned oil at sea is also keeping a floor under prices as buyers compete for other barrels.
Still, banks maintain that there is abundant supply, with Goldman Sachs Group Inc. saying that the surplus was appearing, but mainly in locations that are less significant for price-setting. The International Energy Agency said on Thursday that global oil stockpiles grew at the strongest pace since 2020 last year, underscoring the view that a period of oversupply has arrived, even if it is not being felt evenly across the globe.
As the US-Iranian tensions play out, the Pentagon has positioned a naval force in the region. Israeli President Benjamin Netanyahu met with Trump on Wednesday, with the US leader saying his “preference” is to reach a deal with Tehran on its nuclear ambitions. Netanyahu visited Washington in a bid to warn Trump against such a move, instead hoping to press him to endorse a more sweeping rollback of Iran’s military influence in the region.
Prices are likely to stay range bound, with pullback from diplomatic progress to be limited given the major political hurdles to any durable deal, said Vandana Hari, founder of Vanda Insights.
“Additional adversarial rhetoric or military posturing may add incremental risk premium, but gains are likely to be capped unless US strikes on Iran appear imminent,” Hari said.
Flows from Venezuela are also in focus. China has bought some Venezuelan oil that was purchased earlier by the US, Energy Secretary Chris Wright said at a roundtable with the media in Caracas, without giving details. The Latin American country’s so-called “oil quarantine” was essentially over, he added.
Oil Prices
- WTI for March delivery slipped 2.8% to settle at $62.84 a barrel in New York.
- Brent for April settlement dipped 2.7% to settle at $67.52 a barrel.
by Bloomberg | Mia Gindis, Alex Longley
click here to read this article at rigzone.com
*this article was not written by Roseland Oil & Gas