Oil prices changed slightly on trading today, after a 2 percent hike yesterday. The prices this week reflect modest gains, with developments in Middle East tensions exercising their usual influence on pricing.
Reuters reported the Brent crude futures dipping 6 cents, or 0.1 percent, to $81.69 a barrel by 08:51 GMT. Meanwhile, the U.S. West Texas Intermediate crude futures rose 21 cents to $76.43 a barrel, according to the agency.
Traders on edge
Traders stayed on edge following Israel’s rejection of a ceasefire offer from Hamas. This was compounded by U.S. production forecasts indicating tighter supplies this year.
Vessels passing through the Red Sea continue to be targeted, prompting shipping companies to avoid the route that connects to the Suez Canal, which is a critical pathway between Asia and Europe.
Overall, analysts say the heightened geopolitical risk has prompted traders to adjust their risk assessments. This has contributed to a significant rise in oil prices. Both Brent and WTI are poised for a weekly gain exceeding 5 percent.
Read: Strong dollar to pull back oil prices
Oversupply influence on oil prices
Moreover, global supply factors are also playing a crucial role. For instance, non-OPEC countries like Norway and Guyana are ramping up output. However, the spotlight is on Russia due to recent incidents affecting its oil refineries.
Meanwhile, oversupply concerns were overshadowed by an Energy Information Administration (EIA) forecast that sees U.S. production dipping well below the record levels of December 2023.
“We forecast production will return to almost 13.3 million barrels per day in February but then decrease slightly through the middle of 2024 and will not exceed the December 2023 record until February 2025,” according to an EIA statement this week.
Traders are also focused on the latest draws in both distillates, which includes diesel fuels, and gasoline inventories. Experts see overall supplies for crude, distillates and gasoline sitting below their five-year averages.
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