Oil prices steadied after posting their first weekly gain since early July, as the market awaited Iran's response to the assassination of a Hamas leader in Tehran last month.
Brent crude is trading below $80 a barrel after rising about 4% last week, while West Texas Intermediate crude is nearing $77. Tehran reiterated over the weekend its determination to punish Israel for the killing of the Hamas political leader, with state media there reporting that an Iranian military missile unit was training near the Iraqi border.
Vivek Dhar, an analyst at Commonwealth Bank of Australia, said the market’s concerns would focus on attacks on Iranian oil supplies and infrastructure as the country accounts for about 4% of global oil production. “We see Brent futures trading between $75 and $85 a barrel in the near term, although upside risks remain due to tensions in the Middle East,” he said.
Crude oil prices have followed a recovery in stock markets since falling to a seven-month low early last week, with the gloomy outlook in China, the largest importer, also weighing on traders’ expectations. Traders will be looking to market reports for more clarity on supply and demand balances – with OPEC’s monthly report due on Monday and the International Energy Agency on Tuesday, as well as U.S. inflation data on Wednesday.
Meanwhile, money managers cut their net bullish positions on Brent crude to their lowest level since 2011, while turning to a net bearish position on diesel. In the physical market, warning signs are emerging as U.S. refineries slow and profit margins shrink.
