The idea that the end of the war could soon calm some of the fears linked to the reduction in oil supply. Thus, the price charged in futures contracts fell in Tuesday’s session, moving away from the “round” mark of US$ 100.
At 7:20 p.m., the barrel of Brent fell 4.56%, reaching 94.83 dollars. This is the European benchmark for crude oil trading on capital markets and has reached its lowest level since last Wednesday. The cut was accompanied by the namesake of the North American market, the West Texas Intermediate (WTI)which fell 7.21% to $91.94 per barrel, that is, it was at the lows of March 25th.
The decline in prices is linked to a trend of calm among investors, which was due to several factors.
Donald Trump has been the major agent of market turmoil over the past few weeks. The US president made it known that “something could happen” in the next two days, in Pakistan, where negotiations with Iran took place last weekend.
Furthermore, hours earlier, JD Vance, Trump’s right-hand man who led the delegation, left the guarantee that the talks were not a total failure. In an interview with Fox News, he himself assured that the decision was on the Iranian side.
On the other hand, the International Energy Agency (IEA) expects not only a reduction in supply (due to the destruction of energy installations in the Middle East), but also a cut in demand, linked to the rise in prices charged in the sector.
This entity publishes a monthly report and the April report was published until this Tuesday. Now, according to estimates, there should be an annual reduction of 80 thousand barrels per day (bpd) in terms of demand. A number that contrasts sharply with the previous expectation, of an increase of around 640 thousand bpd. In practice, this is a cut in demand, which should contribute to a drop in prices.
It is worth remembering that the increases are causing inflation even in countries that, like Portugal, do not import oil from Gulf countries. This is because the reduction in available supply is generating increases across the oil industry
That said, risk appetite grew, with part of the investments that were allocated to oil futures migrating to the stock exchange and to precious metals, which registered increases.
With the war in focus, the ‘earnings season’ is in its initial phase and joins the focus of investors, although some of the attention will be focused on companies’ perspectives on the impacts of the war.
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