Oil Steadies Amid Middle East Tensions
Middle East Conflict
Oil prices steadied on Tuesday, with concerns about conflict in the Middle East offsetting weakness in the physical market. Israel escalated attacks in southern Gaza, and a ceasefire deal between Hamas and Israel hung in the balance.
Market Performance
Brent crude futures were down 7 cents to $83.26 a barrel, while U.S. West Texas Intermediate (WTI) crude futures remained unchanged at $78.48.
Impact on Prices
Tamas Varga of oil broker PVM noted that despite ongoing efforts to secure a ceasefire, optimism remained low due to the persistent risk in the physical markets. The lack of optimism is attributed to genuine weakness in physical markets.
Supply Concerns
Market Indicators
The premium of the first-month Brent contract to the six-month contract slipped to $2.95 a barrel on Monday, signaling easing concern about supply tightening. This marked the lowest level since mid-February.
Recent Market Activity
Crude prices settled higher on Monday, partially reversing last week's steep losses. Weak U.S. jobs data and speculation regarding the timing of a Federal Reserve interest rate cut had driven market sentiment last week.
Other Factors Affecting Prices
Currency Impact
A stronger dollar limited gains in crude prices, making oil more expensive for traders holding other currencies.
U.S. Inventory Reports
Market attention also turned to the latest U.S. inventory reports, which were expected to show a decline in crude and product stockpiles for the previous week.
Saudi Arabia's Influence
Saudi Arabia's decision to raise official selling prices for its crude sold to various regions in June signaled expectations of robust demand during the summer months.
By considering these factors, market participants sought to gauge the near-term direction of oil prices amidst ongoing geopolitical tensions and evolving market dynamics.
