Oil dipped amid ceasefire hopes and record US output, raising oversupply concerns
The announcement of anticipated talks between Israeli and Hamas negotiators seemed to shift market sentiment, tempering the heightened volatility observed in recent weeks when threats of escalation drove brisk trading in oil derivatives.
Oil prices edged down nearly 1% on Thursday amid renewed ceasefire negotiations in the Middle East and mounting concerns over a potential global supply glut, stemming from record-high US production.
Brent crude fell by $0.58 to close at $74.38/barrel.
WTI decreased by $0.58 to settle at $70.19/barrel.
The announcement of anticipated talks between Israeli and Hamas negotiators seemed to shift market sentiment, tempering the heightened volatility observed in recent weeks when threats of escalation drove brisk trading in oil derivatives. With the prospect of de-escalation, oil investors are reassessing the risk premium previously priced into the market.
Meanwhile, US crude production reached a historic peak of 13.5 million barrels per day, adding further pressure to prices. OPEC+ members are also considering a restoration of previously cut output levels, which could exacerbate fears of oversupply, especially in light of weakening demand signals from China, the world’s largest oil importer.
Written by: Muhammad Hafiz