Oil prices decline due to renewed focus on market fundamentals

Oil prices fell on Monday, weighed down by a renewed focus on market fundamentals, after Israel and Iran downplayed the risks of escalating hostilities in the Middle East following an apparently limited Israeli strike on Iran.

According to Reuters, Brent crude futures fell 67 cents, equivalent to 0.77%, to $86.62 per barrel by 0415 GMT.

The May contract for US West Texas Intermediate crude, which expires on Monday, fell 63 cents, or 0.76%, to $82.51 per barrel. The most active June contract fell 64 cents to $81.58 a barrel.

“Brent crude prices did not succeed in maintaining their initial rise, with widespread expectations that the geopolitical tension between Israel and Iran may subside given Iran’s calm reaction,” said Yip Jun Rong, a market strategist at IG.

The two benchmarks rose by more than three dollars a barrel early in Friday trading after hearing explosions in the Iranian city of Isfahan in what sources described as an Israeli attack, but Tehran’s downplaying of the impact and saying that it did not intend to respond reduced the gains.

“The more-than-expected increase in US crude inventories did not help matters either,” Yip said.

US crude inventories rose by 2.7 million barrels, according to data from the Energy Information Administration last week, which is nearly double analysts’ expectations.