Oil prices steadied after weekly gains as geopolitical risks in Russia and the Middle East returned to the fore after attacks over the weekend.
Brent crude futures were trading near $84 a barrel after posting their first weekly advance this month, while West Texas Intermediate crude was below $80. A Ukrainian drone strike on a small Russian refinery shut down operations on Sunday, the latest in a series of attacks as fighting between the two countries rages.
In the Middle East, US Central Command said a China-bound oil tanker that recently docked in Russia was hit by a Houthi missile in the Red Sea on Saturday. The market is also awaiting developments in the search for Iranian President Ebrahim Raisi after his helicopter crashed.
Supreme Leader Ayatollah Ali Khamenei said there would be no disruption in the country's affairs as a result of the incident.
Geopolitical tensions
The market has become increasingly indifferent to geopolitical developments, and the large amount of OPEC surplus production is likely to contribute to that, said Warren Patterson, head of commodity strategy at ING Group NV in Singapore. “We may have to wait for more clarity from OPEC+ on production policy to get out of the (current price) range,” he said.
Brent crude has risen about 9% this year on OPEC+ supply cuts but prices have eased since mid-April as geopolitical tensions ease. Market watchers are turning their attention to the producer group’s next meeting on June 1 but are largely expecting the current curbs to be extended.
Hedge funds are leading a growing bearish trend, with money managers cutting their net long positions in Brent crude for a second week. Their bullish expectations are now the lowest since January. There has also been a decline in bets on higher gasoline prices ahead of the summer driving season in the United States.
