(Bloomberg) — Oil steadied after a weekly gain as geopolitical risks in Russia and the Middle East came back into focus following attacks over the weekend.
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Brent futures traded near $84 a barrel after posting the first weekly advance this month, while West Texas Intermediate was below $80. A Ukrainian drone strike on a small Russian refinery halted operations on Sunday, the latest in a string of attacks as fighting intensifies between the two countries.
In the Middle East, a China-bound oil tanker — which most recently docked in Russia — was hit by a Houthi missile in the Red Sea on Saturday, the US Central Command said. The market is also watching for developments on the search for Iran’s President Ebrahim Raisi after his helicopter crashed.
Supreme Leader Ayatollah Ali Khamenei said there “won’t be any disruption to the country’s affairs” as a result of the incident.
“The market has become increasingly numb to geopolitical developments, and the large amount of spare OPEC production is likely contributing to this,” said Warren Patterson, head of commodities strategy for ING Groep NV in Singapore. “We may have to wait for further clarity from OPEC+ on its output policy to break out of the range.”
Global benchmark Brent is around 9% higher this year due to OPEC+ supply cuts but prices have cooled since mid-April as geopolitical tensions eased. Market watchers are turning their attention to the upcoming meeting by the producer group on June 1, but largely expect a rollover of existing curbs.
There’s increased bearishness among hedge funds, with money managers reducing their net long positions on Brent for a second week. They are now the least bullish since January. There was also a pullback on bets for rising gasoline prices ahead of the US summer driving season.
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