Oil prices surged today, Thursday, building on solid gains from the previous session. Persistent concerns over Middle Eastern supply disruptions, fueled by incidents in Libya and heightened tensions, are driving the increase.
Oil prices
Brent crude climbed 38 cents or 0.5 percent, reaching $78.63 a barrel by 0440 GMT. Simultaneously, U.S. West Texas Intermediate (WTI) crude futures rose by 52 cents, a 0.7 percent gain, reaching $73.22 per barrel.
Both benchmarks saw a remarkable 3 percent rise, settling higher for the first time in five days on Wednesday. WTI also saw the biggest daily percentage gain since mid-November.
Factors affecting oil prices
Local protests in Libya forced a complete shutdown of production at the Sharara oilfield. This field is capable of producing up to 300 thousand barrels per day. It has been a recurrent target for both local and broader political protests. The shutdown of this field raises concerns about global oil supply disruptions which in turn, affects oil prices.
In addition, concerns about shipping in the Red Sea persisted amid tensions in the Middle East which also raised concerns for oil supply disruptions.
Supporting the market’s upward trend, the American Petroleum Institute revealed that U.S. crude stocks fell by 7.4 million barrels in the week ending Dec. 29. That is double the decrease anticipated by analysts.
Supply data and OPEC reassurance
Meanwhile, the Energy Information Administration‘s weekly data is expected on Thursday. The Organization of the Petroleum Exporting Countries (OPEC) confirmed that cooperation within the OPEC+ alliance would persist. That is following Angola’s exit from the organization.
In response to Angola’s decision to leave OPEC last month, the organization announced a meeting on February 1 to review the implementation of its latest oil output cut. Analysts will closely watch for any developments that could impact global oil markets.
Read: Gold market sees uptick as dollar weakens
Goldman Sachs’ forecast
Goldman Sachs analysts anticipate Brent to fluctuate between $70 and $90 per barrel in 2024. This projection is based on flexible OPEC+ supply, a low risk of recession, and China’s strategic petroleum reserve purchases. Moreover, the analysts highlight geopolitical risks as a significant factor influencing the forecast.
Goldman Sachs analysts emphasized that geopolitical risks will remain a key factor affecting oil prices. This underlines the sensitivity of oil prices to geopolitical events in the volatile Middle East.
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