Oil settled little changed after swinging in a narrow range throughout the session, with a buildup in U.S. stockpiles and a potential cease-fire in the Middle East suppressing a rebound from yesterday’s sharp losses.

West Texas Intermediate closed below US$79 a barrel and earlier dropped to the lowest in seven weeks after Hamas said it was studying a current cease-fire proposal with a “positive-spirit,” potentially lessening geopolitical tensions. In the physical market, U.S. stockpiles jumped the most since February last week and key timespreads have been pointing to a softer market. 

Oil’s recent selloff was driven by a breach in technical levels that has traders assessing whether there is more room for prices to fall. Currently, key gauges such as the relative strength index are signaling futures were oversold. The dollar also slid earlier in the day, making commodities priced in the currency more appealing. 

“Sell by May, then go away,” analysts at wholesale fuel distributor TACenergy wrote in a note to clients. “The old trading adage looked good for energy markets in 2024 as the new month started off with the biggest daily selloff of the year so far.”

Oil has lost more than 5 per cent this week on signs of easing tensions in the Middle East, including the prospect of a historic pact between the U.S. and Saudi Arabia. Falling equity markets have also provided headwinds for crude in recent days as traders shy away from risk assets. The decline is a turnabout from last month, when oil soared to the highest since October following Iran’s attack on Israel.

On the supply side, the United Arab Emirates’ main oil company said it has bolstered its production capacity, a month before the country meets with fellow OPEC+ nations to decide output levels for the second half of the year. 

Prices:

• WTI for June delivery slipped 0.1 per cent to settle at $78.95 a barrel in New York.
• Brent for July settlement rose 0.3 per cent to $83.67 a barrel.