Oil slumps in Asia as market shrugs off Middle East tensions

31 Jan 2024 , 10:10 AM

 Following advances in the previous session amid an intensifying crisis in the Middle East, oil prices marginally declined in early Asian trading on Wednesday due to persistently negative fundamentals.

The March Brent crude futures, which expire today, had dropped 37 cents to $82.50 a barrel. The April contract, which is traded more frequently, dropped 24 cents to $82.26 per barrel.

West Texas Intermediate crude for the United States fell 18 cents to $77.64.

Without providing more information, President Biden stated that he had chosen how to react to the incident and that he hoped to prevent a wider conflict in the Middle East.

The U.S. Pentagon had speculated that the Iran-aligned Iraqi armed group Kataib Hezbollah would be responsible for the strikes, but no definitive assessment had been made. On Tuesday, the group proclaimed the cessation of all military actions against U.S. troops in the area.

Regarding the Israeli-Palestinian conflict, Hamas announced on Tuesday that it had obtained a ceasefire proposal and was examining it. It seemed to be the most significant peace attempt since the first and only short ceasefire in the war, which broke down in November.

Bearish elements include the worsening real estate crisis in China when the property business China Evergrande Group was liquidated, which has sparked worries about demand from the biggest crude importer in the world. On Wednesday, markets will also be watching for the release of China’s PMI data, which is expected to indicate a drop for the fourth consecutive month.

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