Oil prices rose during trading today, Thursday, January 25 (2024), continuing to reap gains for the second session in a row, supported by fears of supply shortages.
This came after data showed that US crude inventories decreased more than expected last week, while the Chinese Central Bank’s reduction in the banks’ reserve ratio raised hopes for further stimulus measures and economic recovery.
Oil prices ended their trading yesterday, Wednesday, January 24, with an increase of 1%, in an attempt to compensate for the losses they suffered in the last session, amid an assessment of fears of supply cuts and the release of data on a decline in US inventories.
Oil prices today
By 06:48 AM GMT (09:48 AM Mecca time), futures prices for standard Brent crude, for delivery in March 2024, rose by 0.34%, reaching $80.31 per barrel.
Futures prices for US West Texas Intermediate crude, for delivery in March 2024, also increased by 0.43%, reaching $75.41 per barrel, according to data reviewed by the specialized energy platform.
Oil prices witnessed volatile trading during the week, with conflicting assessments regarding supply and demand, following increasing tensions in the Middle East and cold weather problems that disrupted production in the United States.
Oil price analysis
“The significant decline in US oil inventories, expectations of an economic recovery in China, and further stimulus measures supported oil prices,” said Fujitomi Securities analyst Toshitaka Tazawa.
He added that “tensions in the Middle East were also behind the rush to buy,” it said Reuters.
The Energy Information Administration said that US crude inventories fell by 9.2 million barrels last week, more than 4 times analysts’ expectations of 2.2 million barrels, in a Reuters poll.
A pump at an Indian gas station – Photo from Reuters
The withdrawal was driven by a significant decline in US crude oil imports, with winter weather shutting down refineries and keeping motorists off the road.
US oil production fell from a record level of 13.3 million barrels per day two weeks ago, to the lowest level in 5 months, at 12.3 barrels per day last week, after oil wells froze during the Arctic freeze.
Oil prices were also supported by hopes for economic recovery in China, as the Chinese Central Bank announced a significant reduction in bank reserves on Wednesday, in a move that would pump about $140 billion of cash into the banking system, sending a strong signal to support the fragile economy and declining stock markets.
China also announced that it is working to expand banks’ use of commercial real estate lending, in its latest efforts to ease the liquidity crisis facing troubled real estate companies.
Geopolitical tensions
Meanwhile, Priyanka Sachdeva, chief market analyst at brokerage Philip Nova, said geopolitical tensions in the Middle East remained in focus, despite curbing oil price gains, as risk premiums had already been priced in.
“There has been no actual damage to crude oil supplies,” Sachdeva added. “It is just an expectation that the Red Sea infection will further interrupt the flow of oil from the producing region,” adding that this expectation was appropriately taken into account.
She pointed out that oil investors need a tangible catalyst to push prices to higher levels, which seems to be missing at the present time.
In the latest tensions, the US military carried out more strikes in Yemen, early on Wednesday, and destroyed two Houthi anti-ship missiles that were preparing to be launched, targeting the Red Sea.
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2024-01-25 07:17:30
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