Crude oil prices are on course for another weekly decline following the news of a ceasefire between the Israeli government and Hamas, which was ratified today by Tel Aviv.
At the time of writing, Brent crude was trading at $64.90 per barrel, with West Texas Intermediate at $61.28, as the Middle East war premium vanished.
“This (deal) saw the focus move back to the impending oil surplus, as OPEC proceeds with the unwinding of production cuts,” ANZ analyst Daniel Hynes wrote in a note earlier today, as cited by Reuters. The publication noted, however, that the benchmarks could end the week with a slight gain.
On the other hand, Reuters cited Russia’s Deputy Foreign Minister as saying the effort to achieve a similar deal with the Ukrainian government was “largely exhausted”, maintaining the war premium connected to that conflict. A later Reuters report cited a Kremlin aide as saying Moscow continued working with Washington to end the hostilities.
ING’s head of commodity strategy, Warren Patterson, described the Ukraine war as the most prominent upside risk for oil prices, writing in a note Thursday that “the ongoing threat of sanctions and secondary tariffs targeting Russia” provided support for oil benchmarks.
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“A more aggressive stance from President Trump could place broader Russian supply at risk. Another key upside risk also stems from Russia on the supply side, specifically the potential for disruptions caused by Ukrainian drone attacks on Russian energy infrastructure. While most of these attacks have focused on refineries, there have been instances targeting port infrastructure, which could directly impact crude oil exports,” Patterson wrote, reiterating ING’s expectation that oversupply of crude will keep a lid on prices both for the remainder of this year and all of next.
Elsewhere, the U.S. Energy Information Administration reported a rise in fuel demand for the week to October 3, with the Price Futures Group’s Phil Flynn noting the amount, at 21.99 million barrels daily, was the highest since the end of 2022, suggesting demand remained robust in the world’s largest consumer.
By Irina Slav for Oilprice.com
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