Oil Prices Dip Amidst Focus on OPEC, Middle East
Investors Lock in Profits on Lower Oil Prices
Oil prices in the U.S. were lower on Monday, as investors took advantage of the previous week’s impressive gains. The focus has now shifted to developments in the Israel-Hamas war and insights from industry reports.
Decline in Oil Prices
Oil prices are experiencing a decline in early U.S. trade on Monday with U.S. crude expiring in April falling 0.7% to $81.63 a barrel and Brent crude dropping 0.5% to $76.49 per barrel by 09:39 ET.
Stellar Gains of the Previous Week
Both contracts saw an increase of about 5% to 6% in the past week, driven by Israel’s rejection of a ceasefire proposal from Hamas and the continuation of deadly air strikes on the Gaza Strip. This resulted in traders factoring in a greater risk premium from the war.
Impact of the Israel-Hamas War
The Israel-Hamas war has been a significant factor in supporting oil prices due to concerns about potential disruptions in global oil supplies. Additionally, attacks by the Iran-aligned Houthi group in the Red Sea have also affected shipping activity, prompting the market to await further cues from the region.
Worries Over the Middle East
Worries over the Middle East have led to crude prices rising, despite a recovery in U.S. production, which reached record highs in February after cold weather-related disruptions in production. The tightening of U.S. fuel supplies due to several refiners remaining shut for maintenance also contributed to the increase in crude prices.
Upcoming Reports and U.S. Inflation
The Organization of the Petroleum Exporting Countries will release its monthly report on Tuesday, followed by the International Energy Agency on Thursday. Uncertainty looms over whether the two organizations will maintain their oil demand forecasts for 2024 and 2025, given the likelihood of higher U.S. interest rates this year. Additionally, key inflation figures due out on Tuesday could provide more insights on U.S. rates.
