Oil Prices Remain Steady Amid Global Supply and Demand Concerns
Oil Prices Show Minimal Movement Amid Conflicting Supply and Demand Concerns
Oil prices saw little change on Tuesday as traders assessed conflicting supply and demand worries. Tensions in the Middle East and disruptions in U.S. production due to cold weather have contributed to the indecisiveness in the market.
Ukrainian Drone Strike Causes Supply Concerns, Driving Up Prices
Global oil prices had increased by about 2% on Monday, triggered by a Ukrainian drone strike on Novatek’s Ust-Luga fuel export terminal. Although the strike raised supply concerns, analysts expect Novatek to resume operations at the terminal within weeks.
Rising Tensions in the Middle East Add to Market Uncertainty
Recent strikes carried out by U.S. and British forces targeting a Houthi underground storage site have escalated tensions in the Middle East. The attacks have disrupted global shipping and raised fears of inflation, contributing to the uncertainty in the oil market.
Challenges in U.S. Production Impact Oil Prices
Extreme cold weather in the U.S. has led to operational challenges, resulting in 20% of North Dakota’s oil output remaining shut in. These challenges have affected production and contributed to the market’s cautious outlook.
China’s Economic Recovery Poses Concerns for Oil Demand
The sputtering economic recovery in China has raised worries about global oil demand, given China’s status as the world’s leading crude oil importer. Despite measures rolled out by Chinese policymakers, concerns about demand prospects persist.
Market Fundamentals and Geopolitical Conflicts Influence Oil Prices
Analysts remain bullish on near-term market fundamentals due to ongoing geopolitical conflicts. The impact of extreme weather on oil production and escalating conflicts continue to support oil prices.
Market Momentum and Inventory Forecasts Impact Price Movements
The momentum factor is expected to drive oil prices in the short term, influenced by market momentum and inventory forecasts. WTI crude prices managed to close above their 50-day moving average on Monday for the first time since October last year.
Forecasts for U.S. Crude Oil Inventories and Price Expectations
A Reuters poll indicates forecasts for a 3 million barrels decrease in U.S. crude oil inventories for the week ending January 19. This forecast, along with expectations for distillate and gasoline stockpiles, is expected to impact price movements.
By Emily Chow and Trixie Yap
