Brent moves lower as Israel-Hamas ceasefire takes effect
The front-month ICE Brent contract has declined by $0.98/bbl on the day from Friday, to trade at $63.84/bbl at 09.00 GMT.
IMAGE: Getty Images
Upward pressure:
Oil has retained some ground after official drilling figures showed a decline in US oil rigs. The total number of oil rigs fell by four over the week to 418, according to Baker Hughes.
The US oil rig count is seen as an indicator of future oil production. It reflects how much oil drilling activity is happening or expected to happen in the shale sector.
In a tight market, any signal of reduced future supply can put upward pressure on Brent’s price.
Downward pressure:
Brent crude has lost momentum amid easing tensions in the Middle East.
The Israeli government and Hamas leaders have reached a deal for a ceasefire in the Gaza enclave in return for the release of all Israeli hostages held by the Iran-aligned militant group, according to media reports.
“This development [ceasefire announcement] has significantly cut the risk premium associated with the conflict,” remarked ANZ Bank’s senior commodity strategist Daniel Hynes.
The conflict, in its second year now, has destabilised the region, which is one of the biggest sources of the world’s crude oil.
“President Trump’s ceasefire announcement immediately took the premium out of the price of oil,” said Price Futures Group’s senior market analyst Phil Flynn.
The deal has also reduced the risk that Iranian proxies like the Yemen-based Houthis would continue to attack oil vessels transiting the Red Sea region, Flynn added.
By Aparupa Mazumder
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