In Singapore, oil prices experienced a decline of over $1 per barrel on Monday. This was due to Brent crude falling below $90, as tensions in the Middle East eased following Israel’s withdrawal of additional soldiers from southern Gaza and their commitment to negotiate a potential ceasefire in the six-month-long conflict.
The price of Brent crude futures decreased by 1.6%, amounting to a $1.48 drop, reaching $89.69 per barrel by 0615 GMT. Meanwhile, US West Texas Intermediate crude experienced a decline of 1.5%, equivalent to $1.37, setting the price at $85.54 per barrel.
It seems that Israel’s announcement of withdrawing almost all troops, except for one brigade, from the Southern Gaza Strip may be a reaction to increasing global pressure and an attempt to reduce tensions following the recent killing of prominent Iranian commanders in Syria. This observation was made by IG market analyst, Tony Sycamore.
Auckland-based independent analyst Tina Teng commented, “It might be a short-lived setback since the occasion didn’t bring about any significant alterations.”
Israel and Hamas have dispatched negotiating teams to Egypt for discussions on a possible ceasefire, which may alleviate tensions in the Middle East. This development comes before the Eid holidays and has led to a 4% increase in oil prices last week, primarily due to worries about potential disruptions in the supply chain.
On Sunday, Israeli Defense Minister Yoav Gallant stated that Israel is prepared to tackle any situation involving Iran, following Tehran’s warning to retaliate for the assassination of Iranian military leaders on April 1st.
Saudi Arabia, the leading global oil exporter, increased its official selling prices for all crude grades destined for Asia in May, as anticipated. This move comes after a significant reduction in heavy oil supply, causing tightening in the market.
A fire broke out on a Mexico-based offshore oil platform, managed by Pemex (the national oil company), on Saturday, resulting in the unfortunate death of at least one contractor.
Following Pemex’s request to cancel up to 436,000 barrels of crude exports daily in April, Goldman Sachs analysts predict that Brent will remain below $100 per barrel under their base case scenario.
This scenario considers existing strong demand, no additional geopolitical disruptions to oil supply, and anticipates OPEC+ increasing production in Q3 due to ample spare capacity.
In the United States, oil rigs increased by 2 to reach 508 last week, while gas rigs dropped by 2, marking the lowest count since January 2022, according to Baker Hughes’ recent report.
Oil prices climb on supply risk:
The recent US employment report, released on Friday, exceeded predictions, implying that the economy concluded the first quarter on a stable foundation. This could postpone the anticipated Federal Reserve interest rate reductions this year.
Teng suggested that the Federal Reserve might defer rate cuts due to robust US economic data and a tight labor market. This week, investors will analyze consumer price index data from the United States and China to gain insights into potential Federal Reserve rate cut timings and to assess the economic well-being of the world’s top two oil consumers.
