Energy
Friday, January 26th, 2024 6:16 pm EDT
Key Points
- Oil Price Gains: Oil prices are set for a weekly gain driven by optimistic prospects for increased crude demand. West Texas Intermediate (WTI) for March experienced a slight decline, but both WTI and Brent are on track for their best week since October 13, with gains of about 4%. Rising oil prices could lead to slightly higher pump prices for consumers.
- Economic Growth and Stimulus: Stronger-than-expected U.S. economic growth in Q4 2023, reported at 3.3%, compared to the 2% expected by Wall Street, contributes to positive sentiment. China’s move to loosen reserve requirements for its banks to stimulate growth also adds to the optimism, as both the U.S. and China, the two largest oil consumers, may drive robust demand.
- Supply and Geopolitical Factors: U.S. crude supply fell due to winter storms, with crude inventories dropping by 9.2 million barrels last week. OPEC and its allies (OPEC+) are maintaining oil output cuts to support prices. Geopolitically, indications of a truce in Gaza and ongoing tensions in the Middle East, including Houthi militants targeting shipping in the Red Sea and a suspected Ukrainian drone attack on a Russian fuel terminal, contribute to market dynamics.
Oil prices are set to conclude the week with gains, driven by optimism around U.S. economic growth and stimulus measures in China, raising expectations for increased crude demand in 2024. The West Texas Intermediate (WTI) contract for March experienced a slight decline, down 1.2% to $76.43 a barrel, while the Brent contract for March traded at $81.65 a barrel, reflecting a 0.95% decrease. Despite the daily fluctuations, both WTI and Brent are poised for a weekly gain of about 4%, marking their best week since October 13. Factors contributing to the positive outlook include stronger-than-expected U.S. economic growth in the fourth quarter, reported at 3.3%, surpassing the 2% expectation. China’s decision to ease reserve requirements for its banks to stimulate growth further contributes to the positive sentiment, as both countries are significant oil consumers. The potential for robust demand coincides with a decline in U.S. crude supply due to winter storms, with crude inventories falling by 9.2 million barrels last week. OPEC and its allies (OPEC+) are maintaining oil output cuts of 2.2 million barrels per day through at least the first quarter to support prices. Geopolitical factors, including a potential truce in Gaza and ongoing tensions in the Middle East, continue to impact oil prices. The White House’s plan to negotiate a truce in Gaza, led by CIA director William Burns, may influence geopolitical risks. However, uncertainties persist, with Hamas reportedly demanding a permanent ceasefire in exchange for hostages. Ongoing geopolitical threats, such as Houthi militants targeting shipping in the Red Sea and a suspected Ukrainian drone attack on a Russian fuel terminal, add complexity to the oil market. Despite these challenges, positive economic indicators and ongoing geopolitical developments contribute to the overall optimistic outlook for oil prices.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/01/26/crude-oil-prices-today.html
