Energy
Tuesday, February 13th, 2024 5:08 pm EDT
Key Points
- Steady Oil Prices: Despite inflation concerns in the U.S. affecting the stock market, oil futures remained stable. The West Texas Intermediate contract for March saw a modest increase of 12 cents, trading at $77.04 a barrel, while the Brent contract for April traded at $82.03 a barrel, up by 4 cents.
- Impact of Inflation and Interest Rates: Oil prices held despite higher-than-expected inflation in January, with the consumer price index rising to 3.1% annually, exceeding the 2.9% expectation. Additionally, the market shifted away from anticipating a Federal Reserve interest rate cut in May, as lower interest rates typically drive economic growth, boosting oil demand.
- Middle East Tensions and OPEC Outlook: Despite recent stability, concerns over the ongoing conflict in the Middle East persist, potentially impacting crude supplies. The war in Gaza has contributed to market uncertainty. Despite this, both WTI and Brent crude prices have seen year-to-date increases of 7.7% and 6.6%, respectively. OPEC anticipates a tight crude market in 2024, forecasting a demand growth of 2.2 million barrels per day, while production outside the cartel is expected to rise by 1.2 million barrels per day, potentially resulting in a supply deficit unless OPEC adjusts its production cuts.
Oil futures remained steady on Tuesday despite persistent inflation in the U.S. that led to a decline in the stock market. The West Texas Intermediate (WTI) contract for March saw a slight increase of 12 cents, reaching $77.04 per barrel, while the Brent contract for April traded at $82.03 per barrel, up 4 cents. Despite inflation exceeding expectations in January, with the consumer price index rising to 3.1% annually compared to the anticipated 2.9%, oil prices held onto modest gains. Market sentiment shifted away from expectations of the Federal Reserve lowering interest rates in May, as indicated by the CME FedWatch Tool, which typically spurs economic growth and increases oil demand. Last week, both U.S. crude and the global benchmark settled mostly flat after a 6% rally, prompted by escalating tensions in Gaza, underscoring the ongoing risk to crude supplies if the conflict escalates further. Uncertainty surrounding the Middle East conflict and unclear supply and demand dynamics have kept WTI within a range of $68 to $78 per barrel. While WTI and Brent have experienced year-to-date increases of 7.7% and 6.6% respectively, geopolitical events continue to influence oil markets significantly. OPEC forecasts a tight crude market in 2024, with demand expected to rise by 2.2 million barrels per day, outpacing the anticipated increase in production outside the cartel by 1.2 million barrels per day, potentially resulting in a supply deficit. However, the International Energy Agency (IEA) Chief Fatih Birol expressed confidence that oil markets would remain “comfortable” this year, barring additional geopolitical turmoil or extreme weather events. President Joe Biden’s dispatch of CIA Director William Burns to Cairo for talks on a temporary cease-fire in Gaza, amidst the ongoing conflict, reflects efforts to contain tensions that could disrupt oil supplies, particularly through the Strait of Hormuz, amid increased U.S.-Iran tensions.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/02/13/crude-oil-prices-today.html
