(New York) Oil prices fell sharply on Wednesday, after the sharp rise recorded since Monday in the wake of the Hamas attack on Israel and reprisals.
A barrel of Brent from the North Sea, for delivery in December, lost 2.08% to $85.82.
Its American equivalent, a barrel of West Texas Intermediate (WTI), for delivery in November, fell 2.77% to $83.49.
“Crude prices are falling after a mountain of geopolitical risks earlier this week ultimately resulted in no real change in crude production and transit,” noted Edward Moya, an analyst for Oanda.
Israel continued its shelling of the Gaza Strip on Wednesday, with Hamas and Palestinian Islamic Jihad announcing rocket attacks against southern and central Israel, on the fifth day of the war triggered by an unprecedented Hamas offensive.
The conflict has already left thousands dead.
After jumping more than 5% on Monday, WTI and Brent have fallen since Tuesday.
“Fears of a sudden and unexpected disruption in supply” have been “dismissed for the moment”, while those of a slowdown in the global economy and therefore in the demand for black gold are regaining the upper hand, underlines Tamas Varga, analyst at PVM Energy.
However, analysts expect high volatility in black gold prices in the days to come as the conflict evolves.
“The only thing that is becoming clear to energy traders is that the path to the resumption of global growth is becoming increasingly strewn with pitfalls,” Edward Moya further underlined.
The analyst sees the US consumer weakening and Germany falling into a deeper recession not to mention the Chinese slowdown.
ExxonMobil, which announced it would buy the shale oil and gas producer Pioneer Natural Resources for $60 billion, was poorly received on the stock market where the stock lost more than 4% on Wall Street.
The price of European gas reached its highest level in more than six months during the session on Wednesday, driven by numerous supply disruptions in Finland, Israel and potentially Australia, while crude prices were faltering.
After touching 50 euros per MWh, its highest price since the beginning of April, the Dutch TTF futures contract, considered the European benchmark, closed down 5.87% to 46.50 euros per MWh.
European gas prices have risen rapidly since last Friday’s close, “due to supply threats, increased geopolitical risk and colder weather,” DNB analysts explain.
Finland also announced that it suspected that external intervention was the cause of a leak on the gas pipeline connected to Estonia.
The repair work on the gas pipeline will take “at least five months”, estimated the manager of the “Balticconnector”.
Off the Israeli coast, the Chevron group has suspended activities on its Tamar platform, on instructions from the authorities.
“Egypt reports that Israeli gas imports have decreased by around 20%,” DNB analysts point out.