© Reuters. Army soldier miniatures and stock graph are seen in this illustration taken October 9, 2023. REUTERS/Dado Ruvic/Illustration/file photo
By Natalie Grover
LONDON (Reuters) -Oil prices dipped on festering demand concerns and profit-taking prompted by last week’s gains as conflict in the Middle East showed no signs of easing.
futures were down 78 cents, or 0.9%, at $82.69 a barrel by 1030 GMT.
The March contract for U.S. West Texas Intermediate (WTI) crude, which expires on Tuesday, was down 33 cents, or 0.4%, at $78.86 in tepid trade. The WTI April contract was down 72 cents, or 0.9%, at $77.74.
Front-month Brent and WTI futures last week gained about 1.5% and 3% respectively, reflecting increasing risk of Middle East conflict widening.
Capping those gains was slowing demand forecasts from the International Energy Agency and a bigger than expected increase to U.S. producer prices in January, amplifying inflation concerns.
“WTI and Brent eased on Monday morning as investors re-adjust to demand-side fears after a significant jump in U.S. producer price index numbers,” Phillip Nova analyst Priyanka Sachdeva said in a note.
Crude futures had surrendered nearly all of Friday’s modest gains in early Monday trading amid some profit-taking selling, added Vanda (NASDAQ:) Insights’ Vandana Hari.
Demand jitters were magnified on Friday when U.S. Federal Reserve policymakers signalled the need for “patience” over expectations of cuts to interest rates.
Markets are also awaiting indications of the direction of demand from China after it returns from a week-long Lunar New Year holiday while Presidents’ Day in the United States is set to keep trade relatively muted.
The conflict in the Middle East continued over the weekend as Israeli raids put the Gaza Strip’s second-largest hospital out of service.
On Saturday Yemen’s Iran-aligned Houthi fighters claimed responsibility for an attack on an India-bound oil tanker.
Another cargo ship was deemed to be at risk of sinking in the Gulf of Aden on Monday after a Houthi attack.
The Organization of the Petroleum Exporting Countries (OPEC) would be able to cover “most levels of disruption”, ANZ Research analysts said in a note, citing spare capacity at an eight-year high of 6.4 million barrels of oil per day.
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