Oil prices rose during trading today, Tuesday, December 12 (2023), continuing to reap gains for the third session in a row, amid anticipation of central bank decisions.
This comes as investors remain cautious ahead of major decisions on interest rates and the release of inflation data, but concerns about excess supply and slow growth in oil demand limited gains.
Oil prices ended their trading yesterday, Monday, December 11, at an increase, continuing to reap gains for the second session in a row.
Oil prices today
By 06:05 AM GMT (09:05 AM Mecca time), benchmark Brent crude futures, for February 2024 delivery, rose 0.70%, reaching $76.56 per barrel.
At the same time, US West Texas Intermediate crude futures, for delivery in January 2024, increased by 0.74%, reaching $71.85 per barrel, according to figures monitored by the specialized energy platform.
The two benchmark crude oils (Brent and West Texas Intermediate) ended last week’s trading with a decline of about 3.8% each, recording losses for the seventh week in a row, which is their longest series of weekly declines since 2018, due to ongoing fears of a supply glut.
Oil price analysis
“All attention will be on today’s US CPI data to potentially determine the course of US policymakers at their next meeting,” said IG market analyst Yip Jun Rong.
The US Consumer Price Index report is scheduled for release on Tuesday, while the two-day Federal Open Market Committee monetary policy meeting will end on Wednesday.
The US Federal Reserve is widely expected to keep interest rates steady at the end of its meeting on Wednesday, but minutes from the November Fed meeting showed that policymakers remain concerned that inflation may be stubborn, leaving the door open for more… Tighten if necessary.
“Further progress in inflation will be under observation to verify the effectiveness of the current restrictive policies in place and give the Fed more scope to consider cutting interest rates in 2024 if economic conditions worsen,” Yip Jun Rong added.
Geopolitical tensions
Crude oil prices received a boost from rising geopolitical tensions, after a cruise missile launched from Yemen hit a commercial chemicals tanker, causing a fire.
Two US Defense Department officials said that the bombing resulted in damage but no casualties, it was reported Reuters.
The strike is one of the latest attacks carried out by the Iran-aligned Houthis against ships in the Red Sea, escalating geopolitical tensions in the region and increasing risks to the safety of tankers in vital shipping lanes.
Meanwhile, oil investors remain skeptical that total supply will decline after the OPEC+ alliance pledged to cut 2.2 million barrels per day during the first quarter of 2024, as production growth in non-OPEC countries is expected to lead to excess supply. Next year.
Analysts and traders said the voluntary cut may not be long enough, as physical prices and crude oil futures show increasing signs of a future surplus.
“Growth in US shale operations continues to surprise on the upside, while gains by other non-OPEC producers have been unexpectedly large,” ANZ analysts said.
Both WTI and Brent are in a bear market structure, when spot contracts are lower than futures, for the first few months of 2024, as this indicates that investors feel there is less demand for crude oil or sufficient supply for those months.
The market is expected to get a new understanding of fundamentals when OPEC and the International Energy Agency release their monthly oil market reports this week, as the oil market is also watching the negotiations at the COP28 climate summit.
A coalition of more than 100 countries has been pressing for an agreement that would promise, for the first time, a definitive end to the oil era, but it faces opposition from oil-producing countries.
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2023-12-12 06:23:52
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