Oil prices fell in the Asian market due to fundamentals, despite heightened tensions in the Middle East

(1) Oil prices moved lower in early Asian trading on Wednesday amid continued bearish fundamentals, rising in the previous session on the back of the escalating conflict in the Middle East. (2) March Brent crude futures, which expire today, fell $0.47 to $82.40 a barrel. The more actively traded April contract fell $0.34 to $82.16 a barrel. U.S. West Texas Intermediate (WTI) futures fell $0.3 to $77.47. (3) Tony Sycamore, market analyst at IG, said: “The main problem with the outright shift to bullish crude oil is that the technical picture remains bearish and does not yet reflect recent events,” including last week’s drone strike that killed and injured U.S. troops near the Jordan-Syria border. (4) But ANZ analysts said in a note that a “strong military response” from the U.S. to a drone attack could still trigger a strong market reaction. (5) U.S. President Joe Biden said he had decided how to respond to the attack, but did not give further details, but added that he wanted to avoid a wider war in the Middle East. (6) Iraq’s militant group Allah announced on Tuesday that it was suspending all military operations against U.S. forces in the region. (7) Hamas said on Tuesday that it had received a new proposal for a ceasefire and the release of hostages and was studying it. The facilitator, following talks with Israel, presented the proposal, which is the most serious peace initiative in months. (8) But Sycamore said the market is concerned that a ceasefire in Gaza will not necessarily stop Iranian-backed Houthi attacks on Red Sea ships that have disrupted global shipping and oil trade. (9) Bearish factors include deepening concerns about the real estate sector in large Asian countries, which have raised concerns about demand from the world’s largest crude importer