Oil Apathy to Mideast Risk Puts Rally in Doubt: Bloomberg

Oil prices have faltered this week despite a growing threat of supply disruption in the Middle East, Bloomberg said, a sign that a widely anticipated rally may not come to pass.

• The market has been largely inert to the worsening Israel-Hezbollah-Iran tensions, exacerbated by the killing of a Hamas leader in Tehran.
• JP Morgan, UBS, and Standard Chartered all predicted an oil surge to $90/b in Q3, with summer driving demand creating the tightest conditions for the market.
• A steep drop in crude inventories has given some weight to that argument, but traders remain more focused on weak demand signals from China.
• China’s crude imports in H2 2024 are seen stagnating, Bloomberg said, while economic growth is seen at the worst pace in give quarters.
• This sense of caution was reflected in OPEC+’s decision to stick to their plan of gradually unwinding cuts, reiterating that they could pause or reverse the course.