Oil prices fall as Middle East worries ease

Oil markets turned decidedly lower after US Secretary of State Antony Blinken revealed that Israeli Prime Minister Benjamin Netanyahu has accepted a ceasefire proposal to end the war in Gaza and all that remains is for “Hamas to say yes”. Blinken met with senior Israeli officials in Jerusalem on Monday. After hitting four-week highs, the options market’s so-called decline – the cost of insuring against rising or falling prices – turned bearish in the last two trading days, reversing bullish hedges against a further escalation in the Middle East. . Meanwhile, crude oil futures fell by their biggest margin in two weeks after reports suggested a cease-fire and hostage-free deal in Gaza could be closer. Brent crude for October delivery was trading at $78.21 a barrel at 10:20 a.m. ET in the intraday session on Tuesday, down from $81.20 a barrel a week ago, while WTI crude for September delivery was trading at $75.00 per barrel, compared to $78.85/barrel for the week. ago.

According to Again Capital’s John Kilduff, persistently weak Chinese economic data has undermined any price strength in oil markets. On the other hand, ANZ research analysts pointed out that the prospect of weak demand in China was offsetting any gains from supply risks, with government data showing the country’s crude oil demand fell 8% y/y in July. Last week, disappointing economic data showed that China’s industrial activity remains subdued.

Also, improving supply is not helping oil prices. According to Bloomberg, production from Libya’s Waha oil field returned to normal levels of ~300,000 bbl/d after pipeline maintenance was completed earlier than expected, while output from the Sharara field improved to ~85,000 bbl/d, according to Reuters . These developments come just two weeks after Libya’s National Oil Corporation declared force majeure on oil exports from the field following a blockade by protesters on the field.

By Alex Kimani for Oilprice.com

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