Home Business Oil prices fall amid strong dollar and weak demand – SUCH TV

Oil prices fall amid strong dollar and weak demand – SUCH TV

0
Oil prices fall amid strong dollar and weak demand – SUCH TV

In a nuanced market scenario, oil prices experienced a slight downturn on Wednesday, as concerns surrounding lackluster demand and the strength of the U.S. dollar outweighed the impact of escalating geopolitical tensions.

The front-month March contract for Brent crude slipped by 14 cents, or 0.1%, settling at $79.41 per barrel at 0333 GMT, while U.S. West Texas Intermediate crude saw a modest decrease of 11 cents, or 0.2%, closing at $74.26 per barrel.

A notable factor influencing market sentiment was the reported 6.67 million-barrel decline in U.S. crude stocks for the week ending January 19, according to sources citing American Petroleum Institute figures. However, a simultaneous 7.2 million-barrel increase in gasoline inventories raised concerns about potential repercussions for fuel demand in the world’s leading oil consumer.

Adding to the market complexity was the impact of a stronger U.S. dollar, causing buyers in other currencies to pay more for dollar-denominated oil and subsequently dampening global demand.

Middle East crisis

The looming question of geopolitical stability played a dual role in market dynamics. On one hand, the coalition of 24 nations, led by the U.S. and UK, conducted strikes against Houthi fighters in Yemen, aiming to quell attacks on global trade.

Simultaneously, the U.S. executed strikes against Iran-linked militia in Iraq, responding to an attack on an Iraqi air base that had wounded U.S. forces.

Vikas Dwivedi, global energy strategist at Macquarie, commented on the situation, stating, “Without current geopolitical tensions, we believe crude would sell off meaningfully. Over time, we expect supply risk premiums to decouple from conflict risk.”

However, Dwivedi also expressed a cautious outlook, emphasizing that, “Barring escalation in the Middle East, we expect crude prices to stay in the current range for 1Q24. We do not anticipate supply loss.”

On the supply side, Libya’s Sharara oilfield, producing 300,000 barrels per day (bpd), resumed operations on January 21 after a protest-related pause since early January.

Meanwhile, in the U.S., North Dakota, the third-largest oil-producing state, began restoring some oil output after weather-related disruptions. However, output remained below normal, down by as much as 300,000 bpd, following a mid-January dip of up to 425,000 bpd due to extreme cold.

As the market navigates the intricate interplay of demand, supply, and geopolitical dynamics, industry experts and investors closely await the Energy Information Administration’s release of data later today, anticipating insights into the future trajectory of oil prices.

 

Source link

LEAVE A REPLY

Please enter your comment!
Please enter your name here