1519 ET – Three sessions of modest gains aren’t enough to avoid heavy weekly losses in crude oil as the Israel-Iran cease-fire and avoidance of supply disruptions take much of the geopolitical risk premium out of the price. Oil futures are “moving into a consolidation pattern” with support from tighter U.S. stocks, a weaker dollar and the start of the driving season, while greater OPEC production is a negative, BOK Financial’s Dennis Kissler says in a note. “The market seems to be placing value at very near the same levels as before the Iranian conflict started.” WTI settles up 0.4% at $65.52 a barrel, down 11% on the week. Brent edges up 0.1% to $67.77 for a 12% weekly loss. (anthony.harrup@wsj.com)
Oil Heads for Weekly Losses on Fading Geopolitical Risk
0907 ET – Oil futures are higher for a third session, yet on track for solid weekly losses after the Israel-Iran cease-fire caused prices to plunge early in the week. Much of the risk premium that had driven prices to multi-month highs was the idea of disruption to supplies through the Strait of Hormuz, says Jay Truesdale, CEO of risk consultancy TD International. But the likelihood of that happening was low as it was in the interest of the U.S., Iran itself, and other players in the region to keep the strait open. “Most traders have now gone back to base cases anchored by supply and demand, especially given that the world has sufficient oil,” he says. Prices are likely to go back to where they were before the Israeli strikes, “somewhere in the $60s.” WTI is up 0.5% at $65.54, and Brent is up 0.3% at $67.95. (anthony.harrup@wsj.com)
