Yahoo Finance Oil Sinks to Monthly Low as Waning War Risks Foster Uneasy Calm
(Bloomberg) -- Oil fell below $81 after some of the premium from conflict in the Middle East continue to fade from markets.
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An uneasy calm has descended on the market after prices whipsawed on Friday, with Iran downplaying Israel’s response to the Islamic Republic’s unprecedented drone and missile strike a week earlier. Tehran said Monday that Israel has received the “necessary response at this stage.”
“The market has been expecting a potential escalation, we haven’t seen it,” Amrita Sen, co-founder and director of research at Energy Aspects said in a Bloomberg TV interview. Geopolitical escalations have “been quite calibrated, measured on both sides. That’s why prices have been coming off a little bit.”
West Texas Intermediate’s most-active June contract fell as much as 1.9% on Monday before paring losses as equities edged higher. Last week, crude posted the biggest weekly drop since February. Gold also fell in a sign that demand for safe havens is easing.
The US House approved new sanctions on Iran’s oil sector, putting the measure on track to pass the Senate in days. The country also approved fresh funding for Ukraine in its war against Russia.
Read More: US Unlikely to Enforce Iran Sanctions in Election Year: Analyst
Even after recent declines, oil is roughly 12% higher this year due to geopolitical tensions and OPEC+ supply cuts. Investors will be focusing on a slew of US economic data this week, including the Federal Reserve’s preferred measure of inflation, which will give more clues on the path for monetary policy.
Still, money managers are the most bullish on Brent since March 2021 as they snap up contracts to profit from any spikes. Meanwhile, oil call options — which profit when prices rise — posted a second consecutive week of record volumes.
Earnings from supermajors TotalEnergies SE, Chevron Corp. and Exxon Mobil Corp. are also due this week, as well as Reliance Industries Ltd. and Cnooc Ltd.
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