Oil Prices Went Up as Baghdad Attack Rattles Nerves

Oil Prices Went Up as Baghdad Attack Rattles Nerves

On Thursday, oil prices rise after a rocket attack on Baghdad fueled fresh concerns over the possible conflict in the Middle East. This happened following an Iranian missile strike on Iraqi bases hosting U.S. forces, roiling the markets.

Also, they muted gains as the United States and Iran looked to defuse a crisis in the crude-producing region. Brent crude futures climbed 43 cents or 0.7% to $65.87 per barrel. Last Wednesday, it was seesawing and ended with a 4.1% tumble. As of now, they are slightly down on prices before the January 3 killing of top Iranian military commander Qassem Soleimani in a U.S. drone attack that ignited the crisis.

Aside from that, West Texas Intermediate (WTI) futures rose 61 cents or 1%. Moreover, it is currently trading at $60.22 following a fall of nearly 5% in the last session.

In the attack on Thursday, two rockets landed on Baghdad’s Green Zone – houses of foreign missions and government buildings. There were no casualties. There was no urgent claim of responsibility. However, the strike served as a reminder that the regions are still on tenterhooks.

First Quarter

Stratfor oil analyst, Greg Priddy, stated, “We need to be guarded about further sharp declines this week, as we will probably see more activity by proxy militias in Iraq.”

But still, he added that their views are on the absence of actual losses from the conflict with Iran. And the market will experience mild downward pressure in Q1 on inventory builds.

In addition to that, the pressure was evident on Thursday as a result of an unexpected build in U.S. crude stockpiles last week.

Then, crude oil stocks added 1.2 million barrels in the week ended on January 3 to 431.1 million-barrel drop. On the other hand, J.P. Morgan kept its forecast for Brent to average $64.50 per barrel this year.

The bank noted, “The impact on oil prices will depend on (the) extent of supply disruption versus the available spare capacity, global oil inventories, and reaction to oil price from U.S. producers.”

Agri Commodities Prices

Meanwhile, cottonseed oil cake prices on Wednesday dropped by Rs 2 to Rs 2,093 per quintal in futures trade. At the same time, participants chopped their bets amid a weak trend in the spot market.

According to some market players, sell-off by participants at the existing levels amid a subdued trend in the market mostly weighed on cottonseed oil cake prices.

Then, on the National Commodity and Derivatives Exchange, cottonseed oil cake for January delivery fell by Rs 2 or 0.10 percent to Rs 2,093 per quintal. And this has an open interest of 38,380 lots.

For delivery in February, it also dropped Rs 2 or 0.09 percent to Rs 2,119 per quintal in 69,470 lots.

Furthermore, on guar gum prices, it went down by Rs 16 to Rs 7,340 per five quintals in the futures market. This was due to traders offloading their positions amid subdued demand.

Marketmen noted that reducing of positions by participants amid weak demand pulled down guar gum prices.