Crude Oil Weekly Review: Crude oil closed higher in the first week of the new year, with the situation in the Middle East dominating prices
Crude oil prices rebounded on Friday amid continued tensions in the Middle East. The international crude oil benchmark ended higher in the first week of the year, rebounding from losses triggered by a sharp build in U.S. gasoline and distillate stockpiles on Thursday.
WTI February crude oil futures closed up $1.62/barrel, or 2.24%, with a cumulative increase of more than 3.01% this week. Brent crude oil futures rose by $1.17 per barrel, or 1.51%.
(US crude oil and Brent crude oil continuous contract trend chart source: Yihuitong Finance)
【Market analysis】
The conflict between Israel and Hamas has escalated, and the situation in neighboring countries has become tense. U.S. Secretary of State Antony Blinken traveled to the Middle East to try to ease tensions. U.S. Treasury Secretary Yellen said Red Sea shipping has not had a material impact on energy prices.
PVM analyst Tamas Varga pointed out that risks posed by tensions in the Middle East were an important factor in the price rebound.
U.S. non-farm employment growth exceeded expectations in December, prompting financial markets to drop expectations of a March interest rate cut by the Federal Reserve. Jeffrey Roach, chief economist at LPL Financial in Charlotte, North Carolina, said the report reduced the likelihood of the Fed cutting interest rates in March. Views at Thursday’s Federal Reserve meeting that inflation was under control raised concerns about overly restrictive monetary policy.
Bank of America expects Brent crude oil to maintain a trading range between $70/barrel and $90/barrel. However, spare capacity could steepen the oil curve, putting pressure on industry values. Bank of America also predicts that Brent crude oil prices will be US$80/barrel in 2024, but may fall to US$70/barrel in the long term.
John Kilduff, a partner at Again Capital LLC, said geopolitical tensions were driving up trading premiums and strong jobs data also pointed to strong fuel demand.
Logistics and shipping companies are diverting cargo ships to avoid waters infested by Yemen’s Houthi rebels, causing Europe-Asia routes to shift around the African continent. Oilfield services company Baker Hughes said the number of active rigs fell, while the number of crude oil rigs increased and the number of natural gas rigs decreased.
The Biden administration is replenishing the Strategic Petroleum Reserve (SPR) as surging U.S. gasoline and distillate inventories raise concerns about demand stability.
Editor: Talen, Qingyue
2024-01-06 04:51:00
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