Oil prices started the new trading week with significant losses, notes Commerzbank commodities analyst Carsten Fritsch.
Price reaction in oil market may be overstated
“The price of Brent oil fell by more than 4% or a good $3 per barrel right at the open. The same applies to the price of WTI oil. As trading progressed, the losses deepened, with both prices of the “Oil ending the day down 6% and falling to its lowest level since early October. Brent temporarily fell to almost $71 per barrel, WTI to $67.”
“Israel’s retaliatory attack on Iran over the weekend is apparently being interpreted defensively by the market, as only military targets such as missile launchers were hit. Iran’s oil and nuclear facilities were spared. Iran reported only minor damage over the weekend. As a result, market participants believe that the risk of a spiraling escalation and supply disruptions in the oil market has decreased, reflected in the notable decline in the premium. risk.”
“From a purely fundamental perspective, Brent oil in the low 70s is appropriately valued as the oil market is sufficiently supplied and there is an imminent oversupply in the coming year. However, given that it is still unclear whether and how Iran will react to the Israeli attack, it would be premature to completely rule out an escalation. Therefore, yesterday’s price reaction in the oil market may have been exaggerated.”
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
