Oil Falls Below $84 as Geopolitical Risks Ease Slightly
by Bloomberg | Julia Fanzeres and Mia Gindis
click here to read this article at Rigzone.com
*this article was not written by Roseland Oil & Gas
Oil closed at the lowest in more than a week amid signs the crude market’s tightness has slackened and the Israel-Hamas war will remain contained for the time being.
West Texas Intermediate extended Monday’s drop, paring most of the gains made after Hamas’s attack on Israel on Oct. 7. Concerns about the conflict spreading more broadly have eased amid growing calls within Israel to rethink a ground invasion of Gaza. Looming large are fears about the fate of some 200 hostages held there, the danger of retaliation by Hezbollah and the risk of Israeli military casualties.
“Crude is battling the trifecta of headwinds today,” said Rebecca Babin, a senior energy trader at CIBC Private Wealth. “Geopolitical risks are easing modestly, physical indicators are softening and the US dollar is rising. Much of the recent length in the market has been driven by retail buying, which tends to be short-term, event-driven traders.”
Key oil market metrics also are showing signs of loosening. The prompt spread for the US benchmark — the difference between its two nearest contracts — weakened to 77 cents, down from $1.60 at the start of the war. US gasoline futures slumped 2.6% to trade at $2.27 a gallon. Additionally, Russian crude exports rose to a four-month high, despite the Kremlin’s pact with Saudi Arabia to keep barrels off the global market.
On Tuesday, US crude was offered into Europe on a key pricing window at the weakest level in several months, according to data compiled by Bloomberg, with cargo premiums dropping by more than a dollar from a day earlier.
The lack of any immediate supply disruptions in the Middle East, the source of about of a third of the world’s crude, has eroded most of the war’s risk premium. WTI is only 1.1% higher than before the Oct. 7 attack. Still, the possibility remains of Washington ramping up compliance checks on sanctioned Iranian oil and Tehran disrupting key shipping routes.
Crude markets have seen major acquisitions in recent weeks that may result in rising oil output. Exxon Mobil Corp. announced a takeover of Pioneer Natural Resources Co., making it the king of US shale oil. Meanwhile, Chevron Corp.’s $53 billion deal to buy Hess Corp. gives it 30% ownership of more than 11 billion barrels-equivalent of recoverable resources in Guyana, one of the world’s major new oil producers.
Prices:
- WTI for December delivery fell 2% to $83.74 a barrel in New York.
- Brent for December settlement declined 2% to $88.07 a barrel.
by Bloomberg | Julia Fanzeres and Mia Gindis
click here to read this article at Rigzone.com
*this article was not written by Roseland Oil & Gas