Oil prices fell on Monday, April 22, due to increased attention to fundamental market indicators. Risks of escalation in the Middle East decreased after a minor strike by Israel against Iran, reports RBC-Ukraine citing Reuters.
Brent crude oil futures fell 0.8% to $86.60 per barrel. WTI crude oil futures lost 0.7% and were priced at $82.50 per barrel.
«Brent oil prices could not sustain their initial gains due to expectations of easing geopolitical tension between Israel and Iran, considering Iran’s moderate response,» said IG market strategist Yip Jun Rong. «Markets continue to reduce the geopolitical risk premium due to a potential change in the supply situation, which now seems less likely,» he added.
Both major oil contracts sharply jumped by more than $3 per barrel early on April 19 after explosions in the city of Isfahan in Iran, which sources called an Israeli attack. However, the increase was limited after Tehran stated that it had no plans to take any action in response.
«The high increase in US crude oil inventories also influenced prices, as short-term price movements are mostly determined by supply issues rather than demand,» Yip noted for Reuters.
US crude oil inventories rose by 2.7 million barrels, nearly double the analyst expectations of a 1.4 million barrel increase, according to the Energy Information Administration.
«Economic turbulences have once again become a factor in lowering oil prices, especially due to the significant increase in oil inventories in the US and the active policy of the Federal Reserve, which has led to a strengthening dollar,» said independent market analyst Tina Teng.
Federal Reserve Bank of Chicago President Charles Evans became the latest among central bank officials to express longer-term prospects of interest rate cuts, as progress on inflation has «stalled.»
On Saturday, the US House of Representatives passed a aid package for Ukraine and Israel, which includes measures allowing the federal government to expand sanctions against Iran.
