Oil reports weekly gain on Middle-East conflict; Brent settles at $83/bbl

Oil prices settled higher in the previous session as geopolitical tensions in the Middle East more than offset a forecast from the International Energy Agency (IEA) for slowing demand. The growing risk of a wider conflict in the Middle East supported crude prices.

Brent crude futures settled up 61 cents, or 0.74 per cent at $83.47 a barrel. US West Texas Intermediate crude settled $1.16, or 1.49 per cent, higher at $79.19 with the nearby March contract expiring on Tuesday. The April contract rose 87 cents to $78.46. For the week, Brent gained more than one per cent and the US benchmark rose about three per cent.

Also Read: Oil remains range-bound as rate cut hopes fade away: Here’s how US Fed policy decision affects prices

Back home, on the Multi Commodity Exchange (MCX), crude oil futures due for a March 19 expiry, last settled 0.03 per cent higher at 6,484 per bbl, having swung between 6,381 and 6,518 per bbl during the session, against a previous close of 6,482 per barrel.

What’s affecting oil prices?

-On Thursday, Hezbollah said it fired dozens of rockets at a northern Israeli town in a “preliminary response” to the killing of 10 civilians in southern Lebanon, the deadliest day for Lebanese civilians in four months of cross-border hostilities. The oil market’s reaction to news from the Middle East was moderate, according to analysts.

-Gaza’s largest functioning hospital was under siege in Israel’s war with Islamist group Hamas, as warplanes struck Rafah, the last refuge for Palestinians in the enclave, officials said. Threats persisted in the Red Sea after a missile fired from Yemen struck an India-bound tanker carrying crude oil.

-US producer prices increased more than expected in January amid strong gains in the costs of services, which could amplify inflation worries. Still, a slump in retail sales prompted hopes the Fed will soon start cutting rates, which could support oil demand.

-The IEA said global oil demand growth was losing momentum and trimmed its 2024 growth forecast. The agency expects global oil demand growth to decelerate to 1.22 million barrels per day (bpd) in 2024, about half of the growth seen last year, in part due to a sharp slowdown in Chinese consumption. It had previously forecast 2024 demand growth of 1.24 million bpd.

-The Organization of the Petroleum Exporting Countries (OPEC) on Tuesday stuck to its forecast for relatively strong growth in global oil demand in 2024 and 2025 and raised its economic growth forecasts for both years saying there was further upside potential. OPEC expects oil use to keep rising for the next two decades.

-OPEC said in its monthly report that the world oil demand will rise by 2.25 million barrels per day (bpd) in 2024 and by 1.85 million bpd in 2025. Both forecasts were unchanged from last month. A further boost to economic growth could give additional tailwind to oil demand.

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Published: 17 Feb 2024, 07:43 PM IST

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