Oil Edges Lower As Israel Weighs Up Response To Iranian Attack
Oil edged lower amid a continuing focus on Israel’s response to Iran’s weekend attack and a possible rise in US crude inventories.
(Bloomberg) -- Oil edged lower amid a continuing focus on Israel’s response to Iran’s weekend attack and a possible rise in US crude inventories.
Brent fell below $90 a barrel after ending little changed Tuesday, while West Texas Intermediate hovered near $85. Israel has vowed to respond against Tehran for the drone and missile attack, while the US has urged restraint.
After a tumultuous period of geopolitics, traders are returning their gaze to oil market fundamentals. The American Petroleum Institute reported a gain in US stockpiles ahead of government data Wednesday. Key timespreads have weakened in recent days, pointing to a softening market.
Crude has surged this year on the back of geopolitical risks in the Middle East and Russia, and OPEC+ output cuts. Federal Reserve Chair Jerome Powell’s comments Tuesday, however, signaled that policymakers will wait longer than previously anticipated to cut US interest rates. That’s likely to be a headwind for wider energy demand.
While headline price movements are muted, oil options markets are flashing warnings. Bullish call options are trading near the widest premium to opposing puts since October — when the Israel-Hamas war began — as trading volumes of calls soar.
“Oil prices go about their business of unwinding some of the war premium that has been priced in,” said John Evans, an analyst at brokerage PVM.
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