Oil prices edged lower as traders reacted to cooling tensions in the Middle East, contributing to a more cautious sentiment in broader markets. West Texas Intermediate (WTI) crude fell 1.7 per cent, settling below $US62 a barrel, while Brent crude closed near $US65.
The decline follows news that Israel has begun implementing a ceasefire agreement with Hamas, involving the release of all hostages. This marks significant progress towards ending the two-year conflict, which has cast a shadow over crude oil flows from the Middle East, a region responsible for a third of the world’s crude supply.
Despite the Organisation of the Petroleum Exporting Countries (OPEC) and its allies increasing supplies, the impact on prices has been limited by China’s stockpiling of barrels. According to Rebecca Babin, a senior energy trader at CIBC Private Wealth Group, sentiment remains subdued due to concerns over a potential fourth-quarter surplus and fears of slowing crude purchases from China. She anticipates range-bound trading with a mild downside bias, particularly if broader risk assets face pressure.
Oil’s downward movement mirrored the performance of wider markets, absent any significant new supply and demand indicators. The strengthening US dollar also played a role, making commodities priced in the currency less appealing to international buyers.
