Oil was steady after the biggest weekly drop since July as an easing of geopolitical tension in the Middle East turned attention back to a flood of new supply set to hit the market this year.
The threat of an outright war has receded since Tehran fired missiles at U.S.-Iraqi bases last week in retaliation for Washington’s assassination of its top general. The situation in Iran remains volatile, however, amid protests against the government’s accidental downing of a commercial airliner. In Libya, warring factions have called a cease-fire in their nine-month conflict.
West Texas Intermediate crude for February delivery added 3 cents to $59.07 a barrel on the New York Mercantile Exchange as of 10:03 a.m. in London, approaching its 50-day moving average. The contract fell 6.4% last week, the most since mid-July.
Oil prices are now back where they were in mid-December, with the market seemingly shrugging off the chance of more disruptions in the Persian Gulf. The lack of a geopolitical risk premium is partly due to plentiful supplies of U.S. shale and a torrent of new crude from non-OPEC countries including Brazil, Guyana and Norway. On the demand side, the U.S. and China are set to sign their limited trade deal this week, which may improve sentiment.
Brent futures for March settlement was 7 cents higher at $65.05 a barrel on the ICE Futures Europe Exchange after losing 5.3% last week. The global crude benchmark traded at a $6. premium to WTI for the same month.
Source : Bloomberg