Oil prices have been under pressure since Friday, with prices falling by 5%. As a result, Brent fell to $77 per barrel in the morning and is now trading only around $2 above the 7-month low recorded two weeks ago, Commerzbank’s commodity strategist Carsten Fritsch notes.
Hopes of a ceasefire in the Gaza Strip
“New hopes of a ceasefire in the Gaza Strip, which would also significantly reduce the risk of an Iranian retaliatory strike on Israel, are cited as the reason for the price slide. US Secretary of State Blinken, who is currently in Israel, has described the current efforts as the best and possibly the last chance for a ceasefire and has urged the conflict parties to cave in.”
“However, based on the experience of recent months, it is rather uncertain whether this will happen. It therefore seems premature to price out the geopolitical risk premium. Another explanation for the current price weakness is demand concerns as a result of the recently weaker data from China.”
“In addition, OPEC and the IEA cited weaker demand from China as the reason for the downward revisions in oil demand. We consider the price decline since Friday to be exaggerated. An increase in OPEC+ oil production from October has now become even less likely. We therefore expect prices to rebound soon.”
Source: https://www.fxstreet.com/news/hope-for-ceasefire-in-the-middle-east-puts-pressure-on-oil-prices-commerzbank-202408201437