Oil prices extend rally from a weekly gain of 4%
2024-03-18
Summary:
Oil prices rose in early Asian trading, building on last week's 4% gain due to tightening supply amid rising geopolitical tensions.
Oil prices ticked up in early Asian trading on Monday, firming up gains from last week when prices rose nearly 4% on the view that supply was tightening amid escalating geopolitical tensions.
The Slavyansk oil refinery in Russia’s Krasnodar region caught on fire on Sunday after a Ukrainian drone attack. A Reuters analysis found the attacks have idled around 7% of Russian refining capacity in Q1.
Despite international pressures, Israeli Prime Minister Benjamin Netanyahu confirmed he will proceed with plans to push into Gaza's Rafah enclave where more than 1 million displaced people are sheltering.
Iran has sealed contracts worth billions of dollars with domestic companies to boost its oil production in the face of sanctions. Oil Minister Javad Owji said “production will reach four million bpd.”
Oil been range bound for much of the last month, but a bullish IEA report sent prices rising to their highest level since December. The agency now predicted a slight deficit this year, instead of a surplus.
OPEC last week kept its demand growth forecast unchanged at 2.25 million bpd. With the IEA's latest upward revision, it still lags OPEC by nearly 1 million bpd, or almost 1% of daily world demand.
Brent crude appears to be trading within an ascending channel since mid-December, pointing to a continuation of the bullish run. The next resistance is seen at the $87 area.
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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