Oil prices rose marginally during today’s trading, Thursday, December 21 (2023), to continue reaping gains for the fourth session in a row after beginning its trading with a decline.
Oil markets face headwinds from lower demand following a surprise increase in US crude inventories, although concerns remain about global trade disruptions due to tensions in the Middle East.
Yesterday, Wednesday, December 20, oil prices ended their trading at an increase, continuing to reap gains for the third day in a row, with continued fears of disruption to global supplies.
Oil prices today
By 07:15 AM GMT (10:15 AM Mecca time), futures contracts for benchmark Brent crude, for February 2024 delivery, rose 0.05%, to $79.74 per barrel.
At the same time, US West Texas Intermediate crude futures, for delivery in February 2024, increased by 0.03%, reaching $74.24 per barrel, according to figures monitored by the specialized energy platform.
Crude oil prices have risen over the past few days, supported by fears of supply disruption, amid geopolitical tensions that have caused disruption in global trade, following Houthi attacks on ships in the Red Sea.
Oil price analysis
Investors are concerned about trade disruptions as major shipping companies choose to move away from the Red Sea route; Longer trips lead to increased transportation and insurance costs.
“The market focus has returned to slowing global demand, with the impact in the Red Sea seen as limited to oil as long as it does not extend into the Strait of Hormuz,” said NLI Research Institute chief economist Tsuyoshi Ueno.
An oil tanker passes near New York Harbor – Photo from Reuters
He added: “The increase in US crude inventories and record domestic oil production also increase pressure,” the agency reported Reuters.
The US Energy Information Administration said on Wednesday that US crude inventories rose by 2.9 million barrels in the week ending December 15 to 443.7 million barrels, compared to analysts’ expectations in a Reuters poll of a decline of about 2.3 million barrels.
The EIA also said that U.S. crude oil production rose to a record high of 13.3 million barrels per day last week, up from the previous all-time high of 13.2 million barrels per day.
Oil supply
As for shipping, about 12% of global traffic passes through the Red Sea and the Suez Canal, however, analysts say the impact on oil supplies has been limited so far; Because the bulk of Middle Eastern crude is exported through the Strait of Hormuz.
Experts believe that given the lack of additional production cuts by OPEC+ this year; Oil prices are likely to remain within their range until the end of the year, with focus on key economic statistics and the US dollar’s reaction to them.
The US-led coalition that imposes a price cap on seaborne Russian oil announced changes to its compliance system on Wednesday, which the Treasury Department said would make it harder for Russian exporters to exceed the cap.
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2023-12-21 07:38:23
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