Oil is headed for its biggest weekly loss since early November as negotiations progress to reach an agreement to stop the war between Israel and Hamas in what could be a decisive step towards ending the conflict.
WTI rose above $74 a barrel on Friday, but remained down about 5% for the week. Brent was also on track for a weekly decline. People familiar with the matter said that talks on a ceasefire are still in their early stages, and a breakthrough is not expected in the coming days.
There remain fears that rising tensions in the Middle East will escalate rapidly, as the Yemen-based Houthis continue to target shipping in the Red Sea and Gulf of Aden, while the market awaits a US response to a drone attack that killed US soldiers in Jordan over the weekend.
“It is not surprising that the geopolitical risk premium imposed on crude oil has faded as hopes for progress in the Gaza ceasefire talks rise,” said Vishnu Varathan, economist at Mizuho Bank Limited. An unrestricted and short path to a solution.”
Oil capped its monthly advance in January following attacks on commercial ships in the Red Sea, but strong supply and concerns about demand from major consumers kept prices from rising significantly. OPEC+ indicated on Thursday that it would stick to production cuts this quarter.
OPEC reduced its daily oil production by 490,000 barrels last month, as the producer group and its allies embarked on a new effort to prevent a global glut and rising prices, according to a Bloomberg survey.
Source: Bloomberg
