Oil slips on demand jitters and profit-taking
Oil prices dipped on festering demand concerns and profit-taking prompted by last week’s gains as conflict in the Middle East showed no signs of easing.
Brent crude futures were down 78 cents, or 0.9 per cent, at $82.69 a barrel by 1030 GMT.
The March contract for US West Texas Intermediate (WTI) crude , which expires on Tuesday, was down 33 cents, or 0.4 per cent, at $78.86 in tepid trade. The WTI April contract was down 72 cents, or 0.9 per cent, at $77.74.
Front-month Brent and WTI futures last week gained about 1.5 per cent and 3 per cent respectively, reflecting increasing risk of Middle East conflict widening.
Capping those gains was slowing demand forecasts from the International Energy Agency and a bigger than expected increase to US producer prices in January, amplifying inflation concerns.
“WTI and Brent eased on Monday morning as investors re-adjust to demand-side fears after a significant jump in US producer price index numbers,” Phillip Nova analyst Priyanka Sachdeva said in a note.
Crude futures had surrendered nearly all of Friday’s modest gains in early Monday trading amid some profit-taking selling, added Vanda Insights’ Vandana Hari.
Demand jitters were magnified on Friday when US Federal Reserve policymakers signalled the need for “patience” over expectations of cuts to interest rates.
Markets are also awaiting indications of the direction of demand from China after it returns from a week-long Lunar New Year holiday while Presidents’ Day in the United States is set to keep trade relatively muted.
The conflict in the Middle East continued over the weekend as Israeli raids put the Gaza Strip’s second-largest hospital out of service.
On Saturday Yemen’s Iran-aligned Houthi fighters claimed responsibility for an attack on an India-bound oil tanker.
Another cargo ship was deemed to be at risk of sinking in the Gulf of Aden on Monday after a Houthi attack.
The Organization of the Petroleum Exporting Countries (OPEC) would be able to cover “most levels of disruption”, ANZ Research analysts said in a note, citing spare capacity at an eight-year high of 6.4 million barrels of oil per day.