February 05, 2024 (MLN): Global oil prices started the week on a negative note, extending losses after U.S. jobs data reduced the probability of imminent interest rate cuts in the world's largest economy.
Brent crude is currently trading at $77.22 per barrel, down by 0.16% on the day.
While West Texas Intermediate crude (WTI) is trading at $72.21 per barrel, down by 0.18% compared to the previous close.
It is pertinent to note that both benchmarks recorded their most substantial weekly drop since October 2023, primarily attributed to demand concerns, despite the ongoing supply disruptions persisting in the market.
"Hopes of a ceasefire between Israel and Hamas drove some of this weakness," ING analysts said in a note, as Reuters reported.
"However, for now, a ceasefire does not appear imminent," further added.
Investors remained wary of any escalation in the Middle East conflict, after the U.S. signaled further strikes on Iran-backed groups in the Middle East in response to a deadly attack on U.S. troops in Jordan.
The U.S. also continued its campaign against Houthis in Yemen whose attacks on shipping vessels have disrupted global oil trading routes, although supply has been largely unaffected.
"Given the U.S. military strikes avoid directly attacking Iran, we think the Israel-Hamas ceasefire talks will have the more dominant effect – thereby reducing Middle-East tensions," said Commonwealth Bank commodities analyst Vivek Dhar in a note.
"Oil markets will likely respond by continuing to discount supply disruption risks in the Middle East," he said, adding that would likely keep Brent futures below $80 a barrel.
On Friday, the U.S. Department of Justice announced sanctions-evasion charges and seizures linked to an oil trafficking network that it said finances Iran's Islamic Revolutionary Guard Corps.
It seized more than 520,000 barrels of sanctioned Iranian oil aboard the crude tanker Abyss, which had been anchored in the Yellow Sea en route to China.
Iran's budget targets oil sales of 1.35 million barrels per day for the Iranian year starting March 2024, about 1.3% of the 103.5 million bpd global supply forecasted by the International Energy Agency.
In Russia, two Ukrainian attack drones struck the largest oil refinery in the country's south on Saturday, a source in Kyiv told Reuters, the latest in a series of long-range attacks on Russian oil facilities which has reduced Russia's exports of naphtha, a petrochemical feedstock.
Lukoil, which owns the 300,000 bpd Volgograd refinery, later said the plant was working as normal.
In the U.S., power at BP's, 435,000 bpd oil refinery in Whiting, Indiana, had been restored by midday on Friday, but sources said BP had not yet set a date for restarting the plant.
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Posted on: 2024-02-05T14:04:24+05:00
