Oil witnessed a decline in a volatile session as traders assessed the escalating military activities in the Middle East and the anticipation of increased supplies. The US and UK conducted additional airstrikes against the Houthis on Monday to thwart potential attacks on commercial vessels in the Red Sea. Despite heightened geopolitical tensions, West Texas Intermediate (WTI) dropped 0.5%, settling near $74 per barrel, fluctuating within a narrow range of less than $2.
Daniel Ghali, a commodity strategist at TD Securities, commented on this range-bound trading, describing it as challenging for trend followers. The limited activity range prompts algorithms to buy high and sell low, resulting in relatively unchanged prices. However, despite the struggle to establish a clear direction, a key indicator of oil market dynamics, the prompt-spread, has gained strength due to heightened risks in the Red Sea. Brent crude’s front-month futures, a global benchmark, are trading at a 44-cent premium to the next contract, reaching levels near the highest since November, excluding expiration days.
The oil market has faced challenges in setting a definitive course this year, despite conflicts in the Middle East and OPEC’s commitment to limiting production. Abundant non-OPEC output indications, the International Energy Agency’s projection of ample supply, the resumption of flows from Libya’s largest field after a halt, and US drillers recovering from a freeze have all contributed to the complexities.
In Russia, crude shipments by sea hit the lowest point in almost two months due to adverse weather conditions in some ports and a Ukrainian drone strike briefly disrupting flows from a key Baltic export terminal.
Price details:
– WTI for March delivery decreased by 39 cents, settling at $74.37 per barrel.
– Brent for March settlement fell by 51 cents, settling at $79.55 per barrel.
