Feb 9, 2024: Oil prices showed minimal change on Friday, remaining poised for weekly gains, amidst ongoing tensions in the Middle East following Israel’s rejection of a ceasefire proposal from Hamas.
Brent crude futures edged down by 1 cent to $81.62 per barrel, while U.S. West Texas Intermediate crude futures inched up by 3 cents to reach $76.25 per barrel by 0334 GMT.
Both benchmarks experienced around a 3% increase in the previous session, as Israeli forces carried out bombings in the southern border city of Rafah on Thursday, following Prime Minister Benjamin Netanyahu’s dismissal of a proposal to end the conflict in the Palestinian enclave.
These tensions have sustained elevated oil prices, with both Brent and WTI set to secure gains of over 5% for the week.
Warren Patterson, ING’s head of commodities research, commented, “The movement yesterday appeared somewhat excessive considering the lack of substantial fundamental developments. I anticipate the continued range-bound trading we’ve grown accustomed to recently will persist, given the balanced state of the oil market.”
While the conflict has contributed to price support, there has been no noticeable impact on oil production.
Meanwhile, non-OPEC output from Norway and Guyana is on the rise, and Russia is exporting more crude in February than initially planned due to a series of drone attacks and technical issues at its refineries, potentially undermining its commitment to reduce sales under the OPEC+ agreement.
Under this pact with the Organization of the Petroleum Exporting Countries (OPEC) and its allies, Russia agreed to cap crude output at 9.5 million barrels per day (bpd). Additionally, it is voluntarily cutting crude exports by 300,000 bpd and fuel exports by 200,000 bpd from the average levels observed in May-June.
Global oil prices are also facing pressure from deflation risks in China, the world’s largest crude oil importer, according to IG analyst Tony Sycamore. He noted, “I believe the decline in crude oil prices in Asia is mainly attributable to early weakness in China’s equity markets and the repercussions of yesterday’s alarming CPI (Consumer Price Index) figure in China, further eroding confidence ahead of the Lunar New Year festivities.”
