biedexmarkets.com– Oil prices fell in Asian trade on Monday, extending losses from the prior week amid growing hopes that the Iran-Israel conflict will not escalate further, while the prospect of steady U.S. interest rates and worsening global economic conditions also weighed.
Crude prices were also nursing steep losses over the past week as fears of a demand slowdown, amid weak global economic conditions, somewhat offset escalating tensions in the Middle East.
expiring in June fell 0.8% to $86.62 a barrel, while fell 0.8% to $81.59 a barrel by 21:34 ET (01:34 GMT). Both contracts fell more than 3% each last week.
Iran-Israel escalation bets dwindle after Friday strike
Bets that a conflict between Iran and Israel will grow somewhat dwindled in recent sessions, even as Israel reportedly carried out some strikes against Iran on Friday.
But Iran largely downplayed the impact of the Israeli strikes, and flagged no immediate plans for retaliation.
This lack of immediate retaliation was a key driver of bets that the conflict will not worsen. While oil prices had surged to nearly $91 a barrel in the immediate aftermath of the Israeli strikes, they swiftly curbed most of their gains later in Friday’s session.
But continued tensions in the Middle East, especially as a Israel-Hamas truce appeared unlikely, still kept some concerns over supply disruptions in play.
Middle East tensions were the biggest driver of oil price gains in recent months.
Media reports on Monday showed that rockets were fired at a U.S.-led coalition base in Syria, while Israeli strikes in Gaza continued.
Rate fears, demand concerns weigh on oil prices
Oil prices also faced pressure from a recent surge in the dollar, as traders swiftly scaled back bets on early interest rate cuts by the Federal Reserve. This notion was furthered chiefly by stronger-than-expected U.S. inflation readings for March.
Markets also feared that higher-for-longer U.S. interest rates and sticky inflation will damped economic growth this year, in turn chipping away at global oil demand.
Recent data showing a bigger-than-expected build in U.S. inventories furthered these concerns, while also raising questions over just how tight oil markets will be in the coming months.
U.S. oil production has remained at record highs in recent months, somewhat offsetting expectations of tighter supplies on production cuts from other producers, specifically the Organization of Petroleum Exporting Countries.