January 26, 2024 (MLN): Oil prices stood firm on Friday, on track for the second straight weekly gain driven by positive U.S. economic growth and signs of Chinese stimulus-boosted fuel demand sentiment.
Brent crude is currently trading at $81.67 per barrel, down by 0.02% on the day.
Meanwhile, West Texas Intermediate crude (WTI) is trading at $76.95 per barrel, down by 0.06% compared to the previous close.
It is crucial to mention that oil prices are currently trading at their highest levels since the end of November. Additionally, the poised weekly gain for the commodity marks the largest since October 2023.
Prices slipped somewhat on Friday on signs that oil supply disruptions in the Red Sea may ease as China is pressuring Iran to curb attacks on shipping in the waters off Yemen by the Iran-aligned Houthi militia that the group started in retaliation to Israel's Gaza attacks, as Reuters reported.
Chinese officials have asked their Iranian counterparts to help rein in the attacks or risk harming business relations with Beijing, sources said.
However, the Houthis are vowing to continue targeting ships linked to Israel until aid reaches Palestinians in Gaza, the group's leader said on Thursday.
Previous interventions by U.S. and UK forces in the Red Sea had not prevented attacks, leading investors to price in continued disruption, said Yeap Jun Rong, a market strategist at IG in Singapore.
Those disruption concerns are evident in the market structure of Brent futures. The premium of the first-month Brent future to the sixth-month contract rose to $2.53 per barrel, the highest since November.
This market structure, known as backwardation, when prompt prices are higher than later prices indicate traders are expecting supply tightness and stronger demand.
Demand sentiment improved after data on Thursday showed the economy of the U.S., the world's biggest oil consumer expanded more quickly than expected in the fourth quarter.
Also, China, the world's second-largest oil consumer, announced a deep cut to bank reserves to spur economic growth.
Driven by technical factors, oil markets had entered a "short-term uptrend phase", said Kelvin Wong, a markets analyst at OANDA in Singapore.
Prices saw "further positive momentum follow-through after more liquidity easing from China's central bank," Wong added.
Oil was also boosted this week by a larger-than-expected draw in crude stockpiles, and of fuel supply disruption after a Ukrainian drone attack on an export-oriented oil refinery in southern Russia.
Copyright Mettis Link News
Posted on: 2024-01-26T10:57:10+05:00
