Oil prices fell in a volatile session that witnessed traders assessing the military escalation in the Middle East region and balancing it with expectations of an increase in supply.
The United States and Britain launched more air strikes against the Houthis on Monday to prevent the Iran-backed group from attacking commercial ships in the Red Sea.
The conflict has actually led to higher transportation and insurance costs. Despite rising geopolitical tensions, West Texas Intermediate crude fell 0.5% to settle near $74 a barrel after its prices fluctuated in the sub-$2 range.
“This range-bound trading is the Achilles heel of investors who follow the price trend,” said Daniel Ghaly, commodities strategist at TD Securities. He added that the narrow range of price movement pushes algorithms towards buying when the price is high and selling when the price is falling, causing prices to remain largely unchanged.
However, a very important measure of the supply and demand relationship in the oil market, known as the “time margin,” has increased due to the increased risks of navigation in the Red Sea. The market traded next month’s futures contracts for global benchmark Brent crude at a premium of 44 cents to the prices of the contracts immediately following them, approaching the highest level since November, excluding expiration days.
2024-01-23 21:33:45
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