By Despite a slight pullback on Friday, oil futures are still set to post significant gains for the week. These gains were driven by a combination of production outages in the U.S., positive economic data, and concerns over shipping in the Middle East.
Price Movements
-
West Texas Intermediate crude for March delivery fell 76 cents, or 1%, to $76.60 a barrel on the New York Mercantile Exchange. It is on track for a weekly gain of 4.6%.
-
March Brent crude, the global benchmark, was down 68 cents, or 0.8%, at $81.28 a barrel on ICE Futures Europe. It is set for a 3.5% weekly rise.
Market Drivers
Oil futures saw some softness following a report from Reuters stating that Chinese officials have urged Iran to address attacks on ships in the Red Sea by Iran-backed Houthi militants. China, which buys around 90% of Iran’s crude exports, has warned that business relations could be at risk if the situation persists.
While these attacks have led to strikes on Houthi targets by the U.S. military and its allies, as well as rerouting of cargo ships and oil tankers, oil flows from the Middle East have not been disrupted.
Additionally, reduced supply from the U.S. due to cold weather conditions in North Dakota, Texas, and elsewhere has contributed to the recent increase in oil prices. Positive economic data from the U.S. and discussions of economic stimulus measures in China have also boosted expectations for oil demand.
In a note, strategists at Macquarie expressed their overall bearish stance on crude oil but acknowledged a neutral to slightly bullish outlook in the short term. They anticipate that as long as tensions in the Middle East do not escalate further, prices are likely to remain within their current range throughout the first quarter of 2024 due to the absence of any expected supply losses.
Comments