Oil prices were edging higher in early European trade after plunging 6% in the previous session on a lower geopolitical risk premium. Brent crude and WTI were up 0.8% at $71.58 and $67.95 a barrel, respectively.
“The oil market sold off aggressively yesterday after Israel’s measured response [to Iran] over the weekend,” ING analysts said in a note. “While it is still not clear if and how Iran will retaliate, the market is clearly of the view that supply risks have eased for now.”
Prices are finding some support in a U.S. plan to buy up to 3 million barrels of oil for the Strategic Petroleum Reserve. Still, investors’ focus appears to have shifted back to market fundamentals, with a weaker demand outlook and prospects of a supply surplus next year weighing on sentiment.
