Oil slumped as talks to pause the Israel-Hamas war reduced crude’s geopolitical risk premium, with the decline accelerating after crude slipped below key technical levels.
West Texas Intermediate fell about 2% to trade near $72 a barrel, en route to the biggest weekly tumble since early October.
Early negotiations to halt bombardments and release hostages are bolstering prospects for a resolution to the four-month conflict, which has threatened Middle East energy flows. Headlines on the talks and oil’s drop below its 200-day and 50-day moving averages triggered trend-following algorithms, exacerbating the decline.
Meanwhile, there have been several indications that world markets remain adequately supplied. On Friday, WTI’s prompt spread — the difference between its two nearest contracts — flipped as much as 5 cents into contango, a bearish structure that shows weakening demand for near-term barrels.
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