Home Oil and Gas Brent crude oil price falls to $83 as concerns over Middle East supply risks fade

Brent crude oil price falls to $83 as concerns over Middle East supply risks fade

by Business News Report

Oil futures inched lower in Friday dealings, with easing concerns about potential supply disruptions in the Middle East, strength in U.S. production, and signs of slowing demand setting prices up for their largest weekly percentage loss since early February. Traders tied an early Friday rise in oil prices  to a news report that some OPEC+ members would be willing to extend production cuts beyond the end of the second quarter. West Texas Intermediate crude for June delivery fell 29 cents, or 0.4%, to $78.66 a barrel on the New York Mercantile Exchange, on track for a weekly fall of over 6%, FactSet data show.July Brent crude, the global benchmark, was down 12 cents, or 0.1%, at $83.55 a barrel, leaving it down 5.3% for the week.June gasoline RBM24 lost 0.5% to $2.5839 a gallon, while June heating oil HOM24 lost 0.3% to $2.4369 a gallon, with both contracts set for weekly losses.Natural gas for June delivery NGM24 traded at $2.045 per million British thermal units, up 0.5% Friday and eying a weekly rise over 6%. The decline in oil prices “reflects in part the removal of war risk premium that was slowly priced in as the tensions in the Middle East intensified with Iran and Israel attacking each other directly,” said Fawad Razaqzada, market analyst at City Index and FOREX.com.

But tensions have eased, and hopes for a ceasefire between Israel and Hamas have grown amid international pressure on Jerusalem, so oil prices have “basically given back all the gains made since early March,” he said in market commentary. A large jump in U.S. crude inventories reported earlier this week also helped put pressure on crude. There’s “concern about demand in the U.S. where commercial crude inventories have been building more than expected,” with the rate at which refiners process crude to crude products having dropped noticeably, said Razaqzada. Matthew Parry, head of long-term analysis at Energy Aspects, told MarketWatch that expectations of future Chinese refinery runs have been dampened, with Energy Aspects lowering its estimates for the second and third quarters of this year on reports of higher maintenance and compressed margins because of lackluster Chinese diesel demand.

He also said that U.S. oil production, as reported by the Energy Information Administration has also “surprised to the upside.” February’s month-on-month increase of about 600,000 barrels per day marked a “sharp bounce back from January’s weather-induced slump.” Meanwhile, OPEC+ – made up of the Organisation of the Petroleum Exporting Countries and its allies – hasn’t started formal talks, but Reuters reported Thursday that three sources from OPEC+ producers said they would be willing to consider extending cuts due to end in June if demand doesn’t pick up. OPEC+ members are due to meet on June 1. Voluntary production cuts of 2.2 million barrels a day are due to expire at the end of the quarter. MarketWatch

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