Oil climbs amid Europe and Middle East gloom
2024-01-29
Summary:
Oil prices rose 1% after a missile hit a Trafigura tanker in the Red Sea. Russian refined exports declined due to drone attack-related refinery repairs.
Oil prices jumped 1% on Monday after a missile struck a Trafigura-operated fuel tanker in the Red Sea. Elsewhere Russian refined products exports are set to fall as several refineries are under repair after drone attacks.
Both contracts rose for a second week in a row and settled at their highest in nearly two months last week. A resilient US economy and signs of Chinese stimulus boosted demand expectations.
The IEA and OPEC disagree on the strength of demand growth in 2024, reflecting their divergent forecasts on how quickly the world will shift from fossil fuels. The former represents industrialised countries and latter speaks on behalf of oil producers.
OPEC believes oil use will keep rising over the next two decades, while the IEA predicts it will peak by 2030. That global carbon emissions from fossil fuels to hit record in 2023 has raised doubt about the energy transition process.
After better-than-expected output in 2023, the US shale patch is now in the midst of slowing down amid dwindling inventory for top-tier drilling locations. Total North American producer spending is forecast to drop 1% this year following a rise of 13%.
China has called on Iran to intervene in the Red Sea shipping blockade by the Iran-backed Houthis, Reuters reports. The key trade route between Asia and Europe is used widely by ships from the world’s largest exporter of goods.
Brent crude has breached the resistance at its 200 SMA clearly with $85 in sight. On the other hand, breaking 81.00 will stop the expected rise and push the price to turn to decline.
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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