Oil prices recovered some losses on Monday after weekend air strikes in Syria calmed investors’ concerns over escalating Middle Eastern tensions. AP photo by Hassan Ammar.
Oil prices down over 1 per cent
Oil prices fell over one per cent on Monday as investors’ concerns over Middle East tensions waned following Saturday’s limited air strikes by the United States and two allies on Syria.
At 1:15 p.m. EDT, benchmark Brent crude was down 87 cents to $71.71/barrel. Earlier in the session, Brent hit a low of $71.11. US WTI fell 88 cents to $66.451/barrel and the Canadian Crude Index dipped 43 cents to $49.08/barrel.
The US, France and Britain launched 105 missiles targeting three chemical weapons facilities in Syria. The attack was in retaliation for a suspected chemical attack by the Syrian Army on April 7 in the rebel-controlled city of Douma, Syria, that killed 70 people.
Prior to the weekend air strikes, oil prices rose nearly 10 per cent. According to Reuters, investors bulked up on assets, including gold and US Treasuries that traditionally shield against geopolitical risks.
“Some of the ease in Syria is the headline that is bringing it down,” Phil Streible, senior market strategist at RJO Futures told Reuters. Streible added that because the attacks were more surgical than widespread, the market shrugged off bullish factors.
“It has got everything to possibly boost it: weak dollar, Syria, potential sanctions, White House uncertainty, China trade,” he said.
Because the attack was relatively restrained and there seems to be no escalation, either diplomatically or on the ground, “the market has had a sigh of relief,” said Harry Tchilinguirian, global head of commodity market strategy with BNP Paribas.
“Investors continued to worry about the impact of a wider conflict in the Middle East,” ANZ bank said.
Data from the InterContinental Exchange shows fund managers currently holding on to more Brent futures and options than any time since such records began in 2011.
Investors now are considering the possible impact of US sanctions against Iran. US President Donald Trump has said that unless Congress and European allies “fix” the 2015 agreement, he will withdraw from the pact.
Should the US abandon the agreement, it could impose unilateral sanctions on Iran which could limit the country’s oil exports.
“Oil is still holding relatively well and the mid-May Iranian deadline is going to be a bit of a subject for the next four weeks,” Petromatrix strategist Olivier Jakob told Reuters.
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