(Bloomberg) — Oil steadied as traders tracked the fallout from the US push to take control of Greenland, and concerns about a global surplus.
West Texas Intermediate held near $59 a barrel, little changed compared with Friday’s close. Prices didn’t settle on Monday due to a US holiday. Brent closed below $64. President Donald Trump’s push to annex Greenland has rocked markets, bruised the dollar, and raised fears of a damaging US-EU trade war.
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“The market is not pricing a full retaliation between the US and the EU, and it’s likely that a compromise will be found,” said Mukesh Sahdev, chief executive officer at consultancy XAnalysts Pty Ltd. Still, in the event of an escalating spat, the US may prevail given its economic and energy-supply advantage, he said.
Crude remains under pressure from signs supply is outpacing demand, with the price of some physical grades in the Middle East declining as OPEC+ producers raise output. The International Energy Agency, which publishes its next market analysis on Wednesday, has consistently warned of a major glut this year.
“A weaker US dollar and firm timespreads have provided some relative support to oil despite the broader risk-off move,” said Warren Patterson, the head of commodities strategy at ING Groep NV, referring to crude’s pricing differentials between months.
“The outlook for a large surplus suggests prices should trend lower, while the potential for a further escalation in US-EU tensions poses further downside risk,” Patterson added.
Still, beyond overarching glut concerns, pockets of tightness remain in some parts of the market, with issues in the Caspian Pipeline Consortium port in the Black Sea and, now, Kazakhstan’s giant Tengiz oil field contributing to a near-term shortfall of crude from the Mediterranean region.
