Oil Prices Fall Amidst Rising Uncertainties
Global prices of crude oil declined on Monday after a choppy weekend movement amidst rising demand uncertainties across the major markets.
Market data showed that West Texas Intermediate (WTI) trades at $72.04 per barrel, and Brent Oil trades at $77.36 per barrel at the time of writing.
Oil edged lower as fresh instability in the Red Sea was countered by a softer tone in wider markets as traders assess the outlook for monetary policy.
Despite rising tensions in the Middle East, the Red Sea and between China and Taiwan, Oil flows are still expected to stay normal and undisrupted.
The oil market saw a fairly choppy trading session on Friday with ICE Brent trading within a US$2.79 per barrel range, according to ING note. Naira Rises by 19% as Forex Market Pressures Ease
Brent briefly broke above US$80 amid ongoing tension in the Middle East, specifically the Red Sea, following US and UK airstrikes against the Houthis in Yemen.
However, the market was unable to hold on to these earlier gains. While geopolitical risks are certainly building, we are still not seeing a reduction in oil supply as a result of developments in the region.
But, the more escalation seen in the region, the more the market will have to start pricing in a larger risk of supply disruptions.
Speculators boosted their positions in ICE Brent over the last reporting week, increasing their net long by 38,905 lots, leaving them with a net long of 208,748 lots as of last Tuesday – the largest position they have held since October.
The move was predominantly driven by fresh longs with the gross long increasing by 29,942 lots over the period, according to ING note.