(Bloomberg) — Oil prices firmed after a weekly rally as geopolitical risks in Russia and the Middle East came back into focus after the weekend attacks.
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Brent futures were trading near $84 a barrel after recording their first weekly advance this month, while West Texas Intermediate was below $80. Ukraine continued its drone attacks on Russian refineries on Sunday, and on Saturday a China-bound oil tanker was attacked by Houthi missiles in the Red Sea.
In Iran, state television said there were “no signs of life” at the crash site of the helicopter carrying President Ebrahim Raisi. Supreme Leader Ayatollah Khamenei said the incident “will not cause any confusion in national politics.”
“Markets are becoming increasingly insensitive to geopolitical developments, and OPEC's large surplus production is likely contributing to this,” said Warren Patterson, head of commodity strategy at ING Group in Singapore. ” he said. “We may have to wait until there is more clarity on OPEC+ production policy to break out of the range.”
Brent, the world benchmark, has risen about 9% this year due to OPEC+ supply cuts, but prices have been falling since mid-April as geopolitical tensions eased. Market players are keeping an eye on the June 1st meeting of producer organizations, and most expect existing curbs to be lifted.
Hedge funds are increasingly bearish, with asset managers reducing their net long positions in Brent in the second week. They are currently the least bullish they have been since January. Bets that gasoline prices would rise ahead of the US summer driving season also fell.
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