Geopolitical concerns over oil have dissipated

The news of missiles falling in Poland, which has created volatility in the oil market, has taken on a different dimension with new statements, while its negative impact on prices has also dissipated. Oil extended its losses as investors worried about the demand outlook again after geopolitical tensions calmed. US crude fell to $84 a barrel after closing 1.5 percent lower on Wednesday. JPMorgan predicted the US will enter a “moderate” recession next year due to interest rate hikes, while China grapples with rising Covid cases. OPEC lowered its oil demand forecasts earlier this week. NATO and Polish leaders said there was no indication that a missile hitting the country’s border with Ukraine was a deliberate attack by Russia, easing fears that the development could lead to an escalation of war in Europe. The Druzhba pipeline, which carries Russian oil to the west, has also resumed after a power outage. "With geopolitical risks having eased somewhat, demand concerns have once again taken centre stage for the oil market. Chinese demand remains a concern," said Warren Patterson, Head of Commodity Strategy at ING Group.