Oil and gas prices ease back in calmer markets but volatility remains

Oil and gas prices have retreated after Thursday’s painful cost spikes as financial markets calmed at the end of another turbulent week due to the escalating Iran conflict.

UK natural gas prices fell 2% lower in early trading on Friday, having jumped more than a fifth on Thursday to its highest level in three years at one stage.

Brent crude dropped back more than 1% but remained firmly above 100 US dollars a barrel, at nearly 108 dollars, after big gains in the previous session saw it rise as high as 119 dollars a barrel.

The declines follow a statement late on Thursday by Israeli’s Prime Minister Benjamin Netanyahu that he would hold off on any further attacks on Iran’s gas field at the request of US President Donald Trump after the Iranian retaliation sent oil prices skyrocketing.

Financial markets also steadied, with the FTSE 100 Index in London up 0.4% – 41.41 points ahead at 10,104.91 – soon after opening and similar gains across Europe, with the Cac 40 in France up 1.4% and Germany’s Dax nearly 1% higher.

Thursday saw steep falls for stocks worldwide after the Israel strikes targeting energy infrastructure sparked Iranian attacks on Qatar, with Shell’s important gas-to-liquid facility damaged in the assault.

Experts said trading would remain volatile as the conflict shows no sign of a resolution three weeks since the US and Israel’s attacks on Iran began.

Swissquote senior analyst Ipek Ozkardeskaya said: “Despite a relatively calmer morning session, the uncertainty and the volatility will remain on the menu.”

Saxo’s experts added: “Despite the calmer price action, concerns remain that the impact of the conflict will be felt long after hostilities eventually subside.

“The disruption has already led to an unprecedented supply shock, with producers across the Gulf collectively shutting in around 10 million barrels per day of output.

“This has intensified global inflation pressures while simultaneously raising concerns about slowing economic growth.”