Rising tensions between Iran and the West were shrugged off by petroleum investors on Monday, as concerns over sluggish demand continued to weigh.
Crude prices remained under pressure in spite of weekend missile tests by Iran. The country had already come under scrutiny before the weekend after it was announced by UK, US and French officials that a nuclear facility was being built near Qum.
“Whether this latest geopolitical bombshell will have what it takes to stem the severe price declines we have been seeing in energy in recent days remains to be seen,” said Edward Meir at MF Global.
“Energy’s underlying negative fundamentals continue to assert themselves in the interim. Furthermore, there is also quite a bit of spare capacity in the system, so there is no screaming need for Iran’s oil.”
Last week, unexpectedly large rises in inventories of crude and refined products drove US benchmark Nymex West Texas Intermediate 6 per cent lower over the five sessions. Meanwhile, much of the US data last week were unimpressive and lent no support to the demand outlook for energy markets.
By late morning in London on Monday, Nymex WTI was down 0.5 per cent to $65.72 a barrel, while Brent crude was off 0.5 per cent to $64.81.
(By Neil Dennis)