Crude oil prices dropped despite traders moved to commodities as hedge against inflation. With equities down commodities are seen as a safer bet.
U.S. West Texas Intermediate futures dipped by 0.11% to $89.78 per barrel while Brent futures down by 0.21% to $91.22 per barrel.
“When you have an inflationary period, that’s generally good for commodities,” said Stewart Glickman, energy equity analyst at CFRA Research in New York, told Bloomberg.
“As a physical commodity, oil tends to hold its value better. Oil and gold are now seen as safer havens while other assets are being inflated out.”
Besides the macro factors factoring in volatility, traders are also closely observing nuclear agreement with Iran which could add more supply of crudes.
“In the short term, the oil price direction will be a battle between a very tight physical market and potential return of Iranian barrels amid strong momentum in the nuclear negotiations,” said Helge Andre Martinsen, senior oil market analyst at DNB Bank ASA, as reported by Bloomberg.