Oil Prices Decline as Traders Take Profits
by Andreas Exarheas
click here to read this article at Rigzone.com
*this article was not written by Roseland Oil & Gas
In a market analysis sent to Rigzone today, George Pavel, General Manager at Capex.com Middle East, said oil prices declined on Tuesday as traders took profits following a sharp rally that had pushed prices to their highest levels in over a month.
“The recent surge was mainly driven by fears of potential supply disruptions stemming from escalating tensions in the Middle East due to recent attacks involving Iran-backed Hezbollah and Israel’s response,” Pavel said in the analysis.
“While geopolitical tensions remain high, the market appears to be pricing in a low likelihood of direct attacks on Iranian oil infrastructure. OPEC’s spare production capacity is also giving confidence that any potential shortages could be managed,” he added.
Pavel also noted in the analysis that, on the demand side, concerns about slow growth in China have contributed to the cautious outlook for oil.
“Traders are also keeping an eye on upcoming U.S. inflation data and crude oil inventory reports,” he said, adding that “a rise in crude could further pressure prices if they indicate weaker demand”.
“Whilst geopolitical tensions could still create volatility, the market may experience a bearish trend in the near term as market participants digest recent gains and reconsider supply and demand dynamics,” Pavel stated in the analysis.
He went on to note, however, that “any significant escalation in geopolitical risks or unexpected strength in demand could provide further upside momentum for crude prices”.
In a report sent to Rigzone by the Macquarie team on Tuesday, Thierry Wizman, Global FX & Rates Strategist at Macquarie Group, highlighted that “oil prices aren’t rising again today”.
“That’s not because peace has broken out in the Mid-East. In fact, peace seems more elusive,” he said in the report.
“Ominously, Israel’s defense minister is in the U.S. this week, ostensibly to discuss Israel’s response to Iran’s attack of last week. The visit may mean there’ll be no response until those discussions end,” he added.
“But it makes the size and scope of the response feel no less significant. As for oil, there’s the premise that Iran’s oil infrastructure may be attacked, of course, but there’s also the threat that Iran may deliberately blockade the Strait of Hormuz in response to Israel’s response,” he continued.
“The prospect that oil prices rise to $100 per barrel is, no doubt, intended to put pressure on Israel to refrain from attacking Iran at all,” Wizman went on to state.
In the report, Wizman said that, if oil prices do end lower today, it will probably be because of China, not the Mid-East.
“Traders overnight were said to have been let down by the lack of emphasis from China policymakers on pushing more fiscal stimulus through the system,” he stated in the report.
In a separate market analysis sent to Rigzone earlier today, Antonio Di Giacomo, a Senior Market Analyst at XS.com, said oil prices saw a significant increase on Monday.
“This rise is due to growing tensions in the Middle East following an attack by Iran on Israel. Brent, one of the main international benchmarks in the oil market, reached the $81.10 per barrel mark, while WTI rose to $78.42 per barrel,” he highlighted in the analysis.
“This upward trend reflects market concerns about the impact a prolonged conflict in the region could have on the global oil supply,” he went on to state.
by Andreas Exarheas
click here to read this article at Rigzone.com
*this article was not written by Roseland Oil & Gas