Brent continues to trade below $80/bbl on easing supply concerns

The front-month ICE Brent contract inched $0.18/bbl lower on the day, to trade at $77.36/bbl at 09.00 GMT.

PHOTO: Oil barrels. Getty Images

Upward pressure:

Oil prices gained support after Kyiv launched one of the biggest missile attacks since the Russian invasion started in February 2022.

Ukraine launched at least eleven drones towards Moscow, six over the Belgorod region, three over the Kaluga region, and two over the Kursk region, Reuters reports.

Several energy facilities in these regions have been prone to such attacks since the beginning of the conflict. "This is one of the largest attempts to attack Moscow using drones ever," Moscow’s mayor Sergei Sobyanin said on the Telegram messaging app.

Market analysts argue that these attacks have put the region's oil supply under threat and pushed Brent’s price higher.

Oil investors have “been on edge” as they await Iran’s response to the assassination of leaders from its proxies - Hamas and Hezbollah armed groups, ANZ Bank’s senior commodity strategist Daniel Hynes said.

Downward pressure:

Brent’s price traded lower amid growing concerns about China’s demand growth. Oil consumption in the world’s second-largest consumer fell by 8% year-on-year to 13.55 million b/d in July, according to China’s General Administration of Customs (GACC).

In the Middle East, a ceasefire deal agreed upon by Israel has further eased supply concerns and weighed on oil prices, analysts said. The agreement, proposed by the US, aims to end violence in the Gaza Strip and deescalate tensions between Israel and Hamas group.

“Crude continues lower on demand concerns after China’s apparent oil demand fell 8.8% y/y [year-on-year] in July, while raised hopes for a Gaza ceasefire also weigh on sentiment,” analysts from Saxo Bank said.

The US pointed out that Israel is now awaiting Hamas’ response to the agreement. “US Secretary of State Antony Blinken put the onus on Hamas to end the conflict, saying the group must say yes,” Hynes added.

By Aparupa Mazumder

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