As conflicts in the Middle East intensified, international oil prices closed higher on Wednesday (3rd). According to news reports, an explosion occurred during a ceremony commemorating the fourth anniversary of the death of an Iranian military officer, causing many casualties.
In addition, news reports pointed out that Libya’s largest oil field was closed due to protests, which also gave support to oil prices.
However, analysts believe that traders have largely ignored threats such as shipping disruptions in the Red Sea and an expanding war in the Middle East in the past few weeks because these factors have not yet impacted global oil supplies and production.
energy commodity prices
- West Texas Intermediate (WTI) crude oil futures for February delivery rose $2.32, or 3.3%, to settle at $72.70 a barrel.
- Delivered in MarchBrent crude oil (Brent) futures rose $2.36, or 3.1%, to $78.25 a barrel.
- Gasoline futures for February delivery rose 3% to settle at $2.16 a gallon.
- Delivered in FebruaryThermal Fuel FuturesPrices rose 3.1% to $2.60 per gallon.
- Natural gas futures prices for February delivery rose 3.9% to settle at $2.67 per million Btu.
market drivers
Iranian state media reported that an explosion occurred near a cemetery in Iran, where a ceremony to commemorate the death anniversary of Major General Qassem Soleimani in 2020 was being held. The officer was killed in a U.S. drone strike in Iraq in January 2020.
Brent and WTI both closed at their lowest levels since Dec. 13 on Tuesday, failing to hold on to big early gains after an Iranian warship entered the Red Sea.
Oil prices rose early on Tuesday after Iran decided to send a warship to the Red Sea after the U.S. military sank three Iranian-backed ships over the weekend that attacked cargo ships owned by Maersk Line.
Danish shipping giant Maersk announced late Tuesday that it would suspend sailings in the Red Sea.
Oil prices rose after the war between Israel and Hamas broke out last October, but the war premium quickly dissipated. Analysts say that while Houthi rebels have repeatedly attacked ships sailing the Red Sea with drones and missiles, oil traders have largely ignored potential threats to shipping.
Analysts warn that tensions between the two sides may be on the verge of breaking out and the conflict expand to involve Iran.
Meanwhile, according to news reports, Libya’s Sharara oil field, which produces 300,000 barrels of crude oil per day, has been closed by protesters.
Michael Lynch, president of Strategic Energy and Economic Research, said that overall, the oil market appears to be “probably in roughly balance, but there are numerous uncertainties on the supply side, from the small impact of sanctions on Iran, Russia and Venezuela to President Joe Biden in the United States There may be attempts to tighten sanctions.”
He pointed out that the market is worried that rising U.S. interest rates will impact the construction industry such as home construction and sales, reducing oil demand. What deepens the market concern is that “the large amount of travel during the holidays did not have a greater impact on oil demand.”
At the same time, Angola’s withdrawal from the Organization of the Petroleum Exporting Countries (OPEC) has raised concerns about the unity of the organization. Lynch pointed out that “OPEC may find it increasingly difficult to maintain oil prices.” “Saudi Arabia bears most of the responsibility, but this approach may make it more difficult for OPEC to maintain oil prices.” It’s time to come and go.”
He pointed to the recent hot oil news being the U.S. shale oil boom that exceeded expectations. “It looks like U.S. shale oil is growing at about double what was expected at the beginning of the year, and as the economy frees up capital, more rigs may come online.”
The U.S. Energy Information Administration (EIA) will release its oil supply report for last week on Thursday. Due to the New Year holiday on Monday, the supply report will be delayed by one day from the usual release time.
According to the S&P Global Commodity Insights survey, analysts on average expected U.S. crude oil inventories to fall by 4 million barrels last week (ending December 29), gasoline supply to increase by 2.32 million barrels, and distillate supply to increase by 2.6 million barrels.
2024-01-03 22:53:59
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