Oil prices fell on Monday, with Brent crude futures declining 0.77 percent to $86.62 per barrel and WTI crude futures dropping 0.76 percent to $82.51 per barrel. The decline was attributed to a renewed focus on market fundamentals as tensions in the Middle East eased.
Read more: Oil prices soar $3 per barrel amid concerns of supply disruptionsÂ
IG market strategist Yeap Jun Rong noted that markets were unwinding the geopolitical risk premium tied to potential supply disruptions, which now seemed less likely. However, a higher-than-expected build in U.S. crude inventories and a hawkish stance from the Federal Reserve, which led to a stronger U.S. dollar, also weighed on prices.
Independent market analyst Tina Teng added that economic concerns were becoming a bearish factor for the crude market. Meanwhile, the U.S. House of Representatives passed an aid package for Ukraine containing measures, but markets shrugged off the news as the impact remained uncertain.
Overall, the oil price decline reflected a shift in market sentiment away from geopolitical risks and towards supply and demand fundamentals, as well as macroeconomic factors like the Federal Reserve’s policy.
Oil prices saw a significant surge of $3 per barrel on Friday, driven by concerns of escalating tensions in the Middle East. The market became increasingly worried about potential disruptions to oil supply as a result.
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