(Bloomberg) — Oil in London traded near $88 a barrel as increasing geopolitical risks vied with broadly weaker equities markets.
International benchmark Brent crude gained 0.3% after earlier climbing as much as 1.2%. Equities in Europe declined on Monday amid concerns over the U.S. Federal Reserve’s imminent rate liftoff, but oil continues to trade near its highest level since 2014.
Crude’s rally has been buoyed by a combination of robust demand in the face of the omicron variant, while disrupted supply in countries including Libya has also tightened the market. That is now being compounded by heightened political risk as Russia amasses troops near Ukraine, and the United Arab Emirates comes under attack from Yemen’s Houthi rebels.
“Given the geopolitical backdrop over the weekend with Russia-Ukraine tensions and the U.A.E. destroying ballistic missiles over Abu Dhabi, the geopolitical risk in the oil market continues to inch up,” said Keshav Lohiya, founder of Olytics.
Despite the strength in crude, there are some signs that the recent rally could be growing increasingly stretched. Money managers hold more than 12 bullish bets for every bearish one in WTI, the most since November. Crude has also recently been on a run of being technically overbought.
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