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The price of oil, nearing $90, has started to decline.
Oil prices fell from a five-month high on the 8th (local time) after Israel announced it would withdraw some of its troops from Gaza, helping to cool some of the geopolitical gains from last week.
Brent crude futures plummeted by 2.6% before recovering some losses, trading around $91 per barrel.
Amid forecasts that the global benchmark price will reach three digits due to the recent tension in the Middle East and supply shocks, Israel withdrew some of its forces from southern Gaza on Sunday. It announced that the military, including Rafah, is recuperating and preparing for future operations.
In a report, ING analysts Warren Patterson and Ewa Manthey said, “The market is under some downward pressure,” and “The premium reflected in the market will eventually be eroded without any increase.”
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On the other hand, a broader outlook suggests a price increase. The inter-market spread is strong, and volatility is recovering, moving funds toward oil purchases.
Bullish oil call options, which profit when prices rise, are still trading at a premium to bearish put options.
Also, geopolitical issues have impacted the market, struggling with solid demand and supply problems.
Brent crude surged into the overbought zone on the 14-day relative strength index last week, adding short-term headwinds to the benchmark, and it remains close to that level.
According to reports, ceasefire negotiations are underway in Cairo, but no progress has been made. Also, Iran is preparing a response to allegations of an Israeli attack on its consulate in Syria.
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