Adedapo Adesanya
By Adedapo Adesanya
Oil prices shed one percent on Tuesday, cutting recent gains as tensions of a possible retaliation eased in the Middle East after the United States assassinated one of Iran’s military commander, Qassem Soleimani, last Friday.
As a result of this, the market recorded the first loss after four sessions of gains as investors considered that the market was returning as talks of retaliation calmed.
As at the time of this report on Tuesday night, Brent crude was trading down at 56 cents or 0.81 percent to trade at $68.35 per barrel while the West Texas Intermediate crude shed 47 cents or 0.74 percent to settle at $62.80 per barrel.
Prices had risen for the previous sessions on fears that conflict may escalate between the US and Iran and may disrupt oil supply after a military strike killed Qassem Soleimani who is the head of Iran’s elite Quds Force.
As tensions escalated, Iran vowed that it would take revenge and this expectations brought the market to record a surge but since this had not come, the market cut all gains on Tuesday.
Prices drops also occurred despite higher compliance among the member of the Organization of the Petroleum Exporting Countries (OPEC) as parts of agreements to reduce production by 1.7 million barrels per day in order to reduce supply to hike prices.
Reports released on Tuesday morning noted that all OPEC members pumped 29.5 million barrels per day (bpd) last month, 50,000 bpd less from numbers recorded in November 2019.
The oil market may recover on Wednesday as data yet to be released are expected to show that US crude oil inventories likely fell for the fourth straight week till January 3. With this, demand may push prices up.
