Energy
Thursday, February 22nd, 2024 6:47 pm EDT
Key Points
- Crude oil futures rose on Thursday, driven by signs of a tightening global market and ongoing uncertainty in the Middle East.
- The West Texas Intermediate contract for April increased by 67 cents to $78.58 a barrel, while the Brent contract for April rose by 55 cents to $83.58 a barrel.
- UBS strategist Giovanni Staunovo noted that the price premium of first-month futures contracts over subsequent months has risen recently, indicating a tightening oil market. This tightening may be attributed to winter storms in North America disrupting global crude production by 1.4 million barrels per day, coinciding with an 8.2% year-over-year increase in India’s oil demand in January. Additionally, compliance with OPEC+ production cuts has increased, with exports down approximately 900,000 barrels in February, the lowest level since August.
The West Texas Intermediate contract for April rose by 67 cents, reaching $78.58 a barrel, while the Brent contract for April added 55 cents, hitting $83.58 a barrel. These increases come amidst signs of a tightening global oil market and ongoing geopolitical uncertainties in the Middle East. Analysts note that the price premium of first-month futures contracts over subsequent months has risen recently, typically indicating a tightening oil market. Factors contributing to this tightening include winter storms in North America, which disrupted global crude production by 1.4 million barrels per day, coinciding with an 8.2% year-over-year increase in India’s oil demand in January. Additionally, compliance with OPEC+ production cuts has increased, with exports down approximately 900,000 barrels in February, the lowest level since August. Despite a rise in U.S. commercial crude stockpiles by 3.5 million barrels last week, total inventory, including finished products, remained largely flat. Geopolitically, uncertainties persist in the Middle East, with ongoing efforts to secure a cease-fire in Gaza amidst escalating tensions on the Israel-Lebanon border and in the Red Sea. Benny Gantz, an Israel War Cabinet member, suggested progress toward securing the release of hostages held in Gaza, potentially reducing the risk of conflict escalation. However, Israel’s recent strikes against Hezbollah targets in Lebanon and ongoing attacks by Houthi militants in Yemen on shipping in the Red Sea continue to add to the region’s instability.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/02/22/crude-oil-prices-today.html
