The geopolitical premium almost gone in the oil market

Oil prices are slightly higher on Friday morning.

The July contract for Brent oil stands at USD 83.86 per barrel, up 0.2 percent (18 cents) since midnight and up from $83.63 a barrel. barrels when Oslo Børs closed on Thursday. WTI oil rises 0.3 percent to 79.15 dollars per barrel.

Prize almost gone

Brent oil is headed for a decline of around 6 percent for the week, and according to Rystad Energy, the oil is now trading at “fair value”which means that the risk premium the market has previously priced in is now almost completely gone.

Hamas is still considering a proposal for a temporary truce with Israel, but according to Bloomberg is said to be positive and plans to send a delegation to Egypt to continue the negotiations.

– The geopolitical prize is quickly priced out as Israel appears to be more willing to accept a hostage deal. It is difficult to see a major lift above USD 90-95 for Brent oil, and the break below USD 85 suggests that a major peak is now in place, says commodity strategist Robert Rennie in Westpac Banking.

OPEC speculation

Surprising stock building in the US contributed to a marked fall in oil prices on Wednesday evening, and there is also speculation as to whether OPEC+ will extend the production cuts. A survey the news agency has carried out among analysts and traders shows that almost 90 per cent of those questioned expect the cartel to extend the cuts at the next meeting on 1 June.

Three sources close to OPEC+ told Reuters on Thursday that the voluntary cuts of 2.2 million barrels per day day beyond June can be extended if oil demand does not pick up.