Oil ticks up as markets weigh Middle East tensions, supply forecasts
The sun is seen behind a crude oil pump jack in the Permian Basin in Loving County, Texas, U.S., Nov 22, 2019. REUTERS/Angus Mordant/File photo
TOKYO/BEIJING -Oil prices rose on Friday as geopolitical tensions and oil output disruptions in the U.S., the world’s biggest producer, caused by cold weather overshadowed concerns about slow Chinese demand growth and forecasts for ample supply.
Brent crude futures rose 2 cents to $79.12 a barrel by 0715 GMT, while U.S. West Texas Intermediate crude futures (WTI) were up 13 cents to $74.21.
Both benchmarks climbed about 2 percent on Thursday as the International Energy Agency (IEA) joined the Organization of the Petroleum Exporting Countries (OPEC) in forecasting strong growth in global oil demand. This week, WTI is on track to rise about 2 percent while Brent is set to gain 1 percent.
On Thursday, the IEA again raised its 2024 global oil demand growth forecast, though its projection remains lower than OPEC’s expectations, and said the market looked well supplied because of strong growth outside the producer group.
READ: Oil prices rise on strong IEA and OPEC demand estimates
The IEA expects world oil supply to rise by 1.5 million barrels per day (bpd) to a new high of 103.5 million bpd in 2024, fueled by record-setting output from the United States, Brazil, Guyana and Canada.
Pakistan launched strikes on separatist militants inside Iran on Thursday, in a retaliatory attack two days after Tehran said it struck the bases of another group within Pakistani territory.
“As tensions in the Middle East are spreading, traders don’t want to take short positions, but they are also cautious about continuing to build long positions as China’s economic recovery remains slow,” said Hiroyuki Kikukawa, president of NS Trading, a unit of Nissan Securities.
READ: How could Red Sea attacks affect oil and gas shipping?
There are also worries that the U.S.-China conflict could attract attention again as the U.S. presidential election approaches, which would be negative for energy demand, he said.
“Unless tensions in the Middle East quickly escalate further, WTI is likely to continue trading in a range around $70-$76,” he said.
Two oil tankers that had diverted away from the Red Sea have turned back and passed through the Bab al-Mandab Strait offshore Yemen, ship-tracking data showed, though tensions in the region continued to disrupt global shipping and trade.
Tanker traffic through the Bab al-Mandab Strait for Jan. 13-17 was down 58 percent from the same period in 2023, data from consultancy Vortexa indicated.
Attacks on U.S. ships by Houthi rebels in Yemen continued on Thursday, nearly a week after the United States and Britain launched strikes against their positions.
The U.S. Energy Information Administration (EIA) on Thursday reported a larger-than-expected draw in crude inventories of 2.5 million barrels on strong demand from refineries in the week ended Jan. 12, but gasoline and distillate inventories rose to multi-year highs.
Meanwhile, about 40 percent of oil output in North Dakota, a top oil-producing U.S. state, remained shut-in due to extreme cold weather and operational challenges, the state’s pipeline authority said on Wednesday.
