Oil prices are falling on Monday after a steady rise on Friday and over the past week on fears that the escalating conflict in the Middle East will limit the supply of raw materials to the global market.
The decline in the oil market on Monday is facilitated by the information that Saudi Arabia will lower prices for all grades of oil for all regions in February. Prices for Asian buyers will be reduced by $2 per barrel, state-owned Saudi Aramco said on Sunday.
The cost of March futures for Brent crude oil on the London ICE Futures exchange as of 7:10 a.m. on Thursday amounted to $77.88 per barrel, which is $0.88 (1.12%) lower than at the close of the previous trading. On Friday, these contracts rose by $1.17 (1.5%) to $78.76 per barrel.
February futures for WTI in electronic trading on the New York Mercantile Exchange (NYMEX) have fallen by $0.9 (1.22%) to $72.91 per barrel by this time. As a result of the previous trading, the value of these contracts increased by $1.62 (2.2%) to $73.81 per barrel.
Over the past week, Brent rose in price by 2.2%, WTI – by 3%, Market Watch notes.
Traders continue to monitor the situation in Libya, where oil production at the country’s largest field, Al-Sharara, has been suspended due to protests, as well as the situation in the Red Sea after a series of attacks by Yemeni Houthis on commercial vessels.
These factors continue to support the oil market, said Warren Patterson, who is responsible for commodity strategy at ING Groep NV.
“However, in the absence of an escalation of the situation in the Middle East, the potential for price growth is limited given the fairly good balance of supply and demand in the market in the first half of 2024,” the expert says.
Oil prices are rising on Thursday morning after a sharp rise in the previous session.
The price of March futures for Brent on the London ICE Futures exchange at 7:06 a.m. was $78.61 per barrel, which is $0.36 (0.46%) higher than at the close of the previous session. On Wednesday, these contracts jumped in price by $2.36 (3.1%) to $78.25 per barrel.
Quotations for February futures for WTI in electronic trading on the New York Mercantile Exchange (NYMEX) by this time increased by $0.49 (0.67%) to $73.19 per barrel. At the end of the previous session, they rose by $2.32 (3.3%) to $72.70 per barrel.
Oil jumped in price on the news of the deaths of more than a hundred people in explosions near the grave of General Qasem Soleimani in Iran on the anniversary of his death. Soleimani was the commander of the Al-Quds Force of the Islamic Revolutionary Guard Corps. Iran’s intelligence services called the explosions a targeted terrorist attack.
Meanwhile, oil production at Libya’s largest oil field, al-Sharara, has been suspended due to protests. The field produces about 300 thousand barrels of oil per day.
In addition, investors are assessing signals about changes in energy reserves in the United States. According to the American Petroleum Institute (API), in the week to December 29, US oil reserves fell by 7.42 million barrels, while the expected decline was 2.97 million barrels.
Official data from the US Department of Energy will be published at 18:00 on Thursday. Analysts surveyed by Trading Economics expect, on average, that these data will indicate a decrease in oil reserves by 3.73 million barrels.
Benchmark crude oil prices continue to fall.
The market is under pressure from extremely uncertain forecasts for global demand amid an expected increase in supplies, especially from non-OPEC countries, Trading Economics reports.
The price of March futures for Brent on the London ICE Futures exchange at 7:07 a.m. CT is $75.84 per barrel, which is $0.05 (0.07%) lower than at the close of the previous session. On Tuesday, these contracts fell by $1.15 (1.5%) to $75.89 per barrel.
Quotations for February futures for WTI in electronic trading on the New York Mercantile Exchange (NYMEX) on Wednesday morning fell by $0.06 (0.09%) to $70.32 per barrel. At the end of the previous session, they fell by $1.27 (1.8%) to $70.38 per barrel.
Traders’ attention is focused on the prospects for global oil demand and whether the central banks of the world’s leading countries will be able to ensure a “soft landing” of their economies, said Craig Earlam, senior market analyst at OANDA, as quoted by MarketWatch.
Demand is expected to “remain low due to the global economic downturn and record oil production in the United States,” said Haralampos Pissouros, senior investment analyst at XM.
Oil prices are moderately rising on Friday morning after a sharp decline in the previous session.
The price of March futures for Brent on the London ICE Futures exchange by 7:09 a.m. is $77.59 per barrel, which is $0.44 (0.57%) higher than at the close of the previous session. On Thursday, these contracts fell by $2.39 (3%) to $77.15 per barrel.
Quotes for February futures for WTI in electronic trading on the New York Mercantile Exchange (NYMEX) by this time increased by $0.31 (0.43%) to $72.08 per barrel. At the end of the previous session, they fell by $2.34 (3.2%) to $71.77 per barrel.
Analysts say the main reason for the drop in oil prices on the eve of the previous day is the reduction of fears about attacks by Yemeni Houthis on transport vessels. In particular, on Wednesday, the Danish transport and logistics company A.P. Moeller-Maersk AS announced the resumption of transportation through the Red Sea after the implementation of an international mission to ensure security in the region.
“Oil prices have fallen as global transportation giants prepare to resume navigation in the Red Sea despite attacks by Houthi rebels,” wrote Stephen Innes, managing partner of SPI Asset Management. – “It’s a calculated risk and a bet on the success of the international security mission.
The quotes could not be supported by the data on oil and oil products stocks in the United States published the day before.
Commercial oil reserves in the United States last week fell by 6.911 million barrels, while analysts on average had forecast a decline of 2.7 million barrels, according to Trading Economics. The decline in stocks was a record for four months.
Stocks at the Cushing terminal, where NYMEX-traded crude is stored, increased by 1.508 million barrels. This is the tenth consecutive week that Cushing stockpiles have increased, which has not been seen since 2016.
Oil prices stabilized on Thursday after falling the day before on signals that the supply of crude oil on the market exceeds demand.
Data from the American Petroleum Institute (API), released on Wednesday night, showed an increase in US stocks last week by 1.837 million barrels. In particular, stocks increased at the Cushing terminal, where oil traded on the Nymex is stored.
The official data on energy reserves will be released by the US Department of Energy on Thursday at 18:00 p.m. If confirmed, the increase in Cushing oil reserves will be recorded for the tenth consecutive week, which will be the longest period of continuous growth since 2016.
The cost of February futures for Brent oil on the London ICE Futures exchange as of 7:20 a.m. amounted to $79.61 per barrel, which is $0.04 (0.05%) lower than at the close of the previous trading. As a result of trading on Wednesday, these contracts fell by $1.42 (1.8%) to $79.65 per barrel.
Futures for WTI for February in electronic trading on the New York Mercantile Exchange (NYMEX) fell by $0.09 (0.12%) to $74.02 per barrel. The day before, the value of contracts fell by $1.46 (1.9%) to $74.11 per barrel.
Concerns about the outlook for demand, especially in China, are growing, says CIBC Private Wealth analyst Rebecca Babin, quoted by Market Watch. Oil consumption in China, which was quite high in the first three quarters of this year, is weakening, she notes.
“Lack of confidence in the prospects for the Chinese economy in 2024 is the main factor that worries market participants,” Babin said. – “The second most important factor is the possibility that US production will exceed forecasts, as it did in 2023.
Oil prices are correcting downward after updating December highs the day before, investors continue to assess the situation in the Red Sea.
The cost of February futures for Brent crude oil on London’s ICE Futures exchange as of 7:03 a.m. Q2 is $81.04 per barrel, which is $0.03 (0.04%) lower than at the close of the previous session. At the end of previous trading, these contracts rose by $2 (2.5%), to the maximum since November 30, $81.07 per barrel.
WTI crude oil futures for February at the electronic trading of the New York Mercantile Exchange (NYMEX) fell by $0.15 (0.2%) to $75.42 per barrel. On Tuesday, those contracts were up $2.01 (2.7%) to $75.57 a barrel, also the highest since Nov. 30.
Yemen’s Houthi rebels have attacked another cargo ship in the Red Sea, Al-Arabiya TV reported Tuesday, citing rebel military spokesman Yahya Sarea. He said the crew of the commercial ship MSC United ignored warning signals three times, after which the rebels fired rockets at it.
Also on Tuesday, the United Kingdom’s Office of Maritime Trade Operations said there were explosions and rocket launches in the Red Sea near the port of Hodeida.
Earlier, Danish transportation and logistics company A.P. Moeller-Maersk AS said it plans to resume shipping in the Red Sea after an international ship security mission. Managing partner of SPI Asset Management Stephen Innes, whose words are quoted by MarketWatch, called the mission a positive step toward restoring safe maritime transportation in the region.
