Brent futures dropped $1.21, or 1.4%, to $86.08 a barrel, the front-month U.S. WTI crude contract for May dropped 97 cents, or 1.2%, to $82.17 a barrel, while the more active June contract declined $1.23 to $80.99 a barrel
Oil prices dropped more than 1% on Monday, as the market focus switched to fundamentals after Israel and Iran played down the risk of an escalation of hostilities after Israel’s apparently small strike on Iran.
Brent futures dropped $1.21, or 1.4%, to $86.08 a barrel by 0655 GMT. The front-month U.S. West Texas Intermediate (WTI) crude contract for May, which expires on Monday, dropped 97 cents, or 1.2%, to $82.17 a barrel, while the more active June contract declined $1.23 to $80.99 a barrel.
Brent crude prices failed to retain their initial surge, with broad expectations that geopolitical tensions between Israel and Iran may fizzle off given Iran’s tamed response, said Yeap Jun Rong, market strategist at IG.
With that, markets continue to unwind the geopolitical risk premium tied to potential supply disruptions, which seems more unlikely at current point in time, he said.
Both benchmarks advanced more than $3 a barrel early on Friday.
Yeap said rising U.S. crude stocks had added to the pressure to sell.
U.S. crude inventories advanced by 2.7 million barrels, Energy Information Administration (EIA) data showed last week, nearly double analysts’ expectations of a 1.4 million barrel gain.
“Economic concerns again become a bearish factor of the crude market,” with prices “under pressure due to a large build in the U.S. stockpile and a hawkish Fed that led to a strong dollar,” said independent market analyst Tina Teng.
Chicago Federal Reserve President Austan Goolsbee on Friday became the latest central banker to hint a longer timeline for interest rate reductions because progress on curbing inflation had stalled.
