Remember the days when any minor unrest anywhere (Nigeria, usually) was a reason to push oil to the moon? Now even a major outbreak of violence in Israel can’t get the markets too excited:
MarketWatch: In thin trading, light, sweet crude for February delivery was last up 49 cents, or 1.3%, to $38.18 a barrel in electronic trading on Globex. Earlier, the contract had soared to an intraday high of $42.20 a barrel.
“The strikes by Israel have heightened tensions in the region, increasing the geopolitical risk premium in the price on fears that there could be some disruption to crude supplies from the Middle East,” said Michael Davies, an analyst at Sucden Financial Research, in a note.
“However, the risk of any significant disruption remains low and the move seems a little overdone and can possibly be explained by the thin market conditions over the holiday period,” Davies said. On Friday, oil futures ended up $2.36, or 6.7%, at $37.71 a barrel on the New York Mercantile Exchange. Despite the gain, oil finished the week down 11%.