Oil gave up early gains while stocks advanced on Monday after US and Iran agreed to halt strikes that threatened the fragile ceasefire in the Gulf over the weekend.
Brent, the benchmark for two thirds of the world's oil, which rose as much as the 1.9 per cent during early trade, lost ground, trading 0.64 per cent higher at $72.44 a barrel at 9am UAE time.
West Texas Intermediate, the gauge that tracks US crude, climbed 1.13 per cent to $70.01 per barrel.
Brent, which closed more than 4 per cent down on Friday, slumped 10 per cent for the week, adding to 9 per cent of losses accumulated a week before. Brent is currently trading below the prewar $72.87 a barrel level, giving up all gains it had accumulated during the conflict which started on February 28.
WTI also closed below $70 per barrel mark last week, edging to its prewar closing level of $67.02 on February 27.
The drop in oil prices came after the US and Iran agreed to halt strikes for now and allow vessels to move freely through the Strait of Hormuz as technical talks are set to continue, Reuters quoted an American official as saying on Monday.
“Technical talks are slated to continue on all areas of the MoU [memorandum of understanding]. Both sides will stand down for now and vessels can move freely,” the official said, without providing further details about the negotiations or how long the pause would last.
The two sides carried out strikes after a vessel was attacked in the strait. US President Donald Trump called it a violation of the ceasefire agreement signed earlier this month, which provides for the warring parties to reach a permanent peace deal within 60 days.
US struck Iranian targets in the strait and Tehran launched retaliatory strikes on its Gulf neighbours Bahrain and Kuwait at the weekend that stoked fears of Iran potentially closing the strait again.
However, the news of de-escalation “has helped oil unwind earlier gains and US equity futures recover some ground”, Daniel Richards, Mena economist at Dubai’s Emirates NBD bank, said in a note to investors on Monday.
Stocks and gold
The pause in hostilities and the potential progression of talks in Doha also lifted investor risk appetite with the stocks in Asia as well as US equities futures gaining on Monday.
Hong Kong's Hang Seng rose 1.77 per cent, Australia's ASX 200 rose 0.55 per cent, the Shanghai Composite Index advanced 0.32 per cent while Japan’s Nikkei 225 slipped 0.33 per cent.
In the US, S&P 500 futures gained 0.68 per cent while Nasdaq 100 Future advanced 0.81 per cent.
Elsewhere, the dollar was little changed against its major global peers. Gold, which has taken a battering in recent weeks, however dropped almost 0.69 per cent to $4,057.55 an ounce.
Bitcoin, the world’s largest cryptocurrency was trading 0.25 per cent higher, as it rose above the $60,000 mark.
