SINGAPORE- Oil prices fell on Monday, dragged down by a renewed focus on market fundamentals as Israel and Iran played down the risks of an escalation of hostilities in the Middle East after Israel’s apparently small strike on Iran.
Brent futures fell 67 cents, or 0.77 percent, to $86.62 a barrel. The front-month US West Texas Intermediate (WTI) crude contract for May which expires on Monday, fell 63 cents, or 0.76 percent, to $82.51 a barrel, while the more active June contract dropped 64 cents to $81.58 a barrel.
“Brent crude prices failed to retain its 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 added.
Both benchmarks had spiked more than $3 a barrel early on Friday, after explosions were heard in the Iranian city of Isfahan in what sources described as an Israeli attack, though gains were capped after Tehran played down the incident and said it did not plan to retaliate.
“Higher-than-expected build in US crude inventories did not help matters as well, with near-term price movement seeming more of a supply-side story than demand,” Yeap told Reuters.
