Crude prices boosted by higher demand hope
2024-01-26
Summary:
Oil prices fell after a 3% gain, reaching their December high amid an improved economic outlook and Red Sea tensions disrupting global trade.
Oil prices retreated on Friday after a gain of about 3%. They hit their highest since December due to improved economic outlook and escalating tensions in the Red Sea that disrupts global trade.
The US economy grew at blistering 3.3% pace in Q4, well above consensus estimate for a gain of 2%. Core price for PCE eased to 2% for the period, a sign of more progress on inflation.
US crude stockpiles tumbled by 9.2 million barrels last week, the EIA said, more than quadruple the 2.2 million-barrel draw analysts forecast in a Reuters poll. The winter storm caused the biggest drop in crude production since Sep 2021.
China’s stimulus is another tailwind after the central bank announced a deep cut in bank reserves on Wednesday. Its oil demand growth is expected to cool in 2024 as pent-up appetite for travel fades away.
Maersk says two US-flagged vessels transiting the Bab el-Mandeb strait northbound accompanied by the US Navy turned around after seeing explosions nearby. Two missiles were shot down, said the US central command.
The US and the UK have issued new sanctions on leaders of Yemen’s Houthis, as the group pledges to continue its attacks on Israel-linked commercial vessels until aid is delivered to Gaza.
WTI Crude is testing the 200 SMA where we may see some profit-taking. Given a breakout, $80 is well positioned to cap further gains as high interest rates linger.
Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
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