Deutsche Bank strategists highlight sharp volatility in Brent Oil as Middle East ceasefire doubts resurface. Brent initially slumped over 13% to a four-week low near $95, then rebounded above $96 as concerns about Hormuz shipping and ceasefire durability persisted. They note more modest declines further out the curve and easing stagflation fears.

Ceasefire uncertainty drives sharp reversals

"So overall, even with the question marks around a ceasefire, the fact one had been agreed led to a huge wave of optimism, with investors feeling much clearer about the path to a de-escalation. Most directly, the prospect that the Strait of Hormuz might reopen led to a big decline in oil prices, with Brent crude (-13.29%) down to a 4-week low of $94.75/bbl, whilst WTI (-16.41%) fell to $94.41/bbl."

"However, with persisting restrictions on Hormuz shipping, the declines were more modest further out the oil curve, with the 6-month Brent future (-2.33%) closing at $81.19/bbl, still above its levels late last week."

"As we go to press this morning, oil prices are creeping up again as several questions remain about the ceasefire announced on Tuesday night. A few factors have driven that, but it’s pushed Brent crude oil (+2.34%) back up to $96.97/bbl, and it’s also taken the momentum out of the market rally overnight."

"So even with all the volatility of recent weeks it was another day of historic moves, and the overnight move for Brent crude this morning (+2.34%) still leaves us well beneath the pre-ceasefire oil price of around $110/bbl."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)