Sign In with Google
Sign In with Facebook
Oil Prices Climb Amid Global Stability Concerns
Monday marked a rise in oil prices, influenced greatly by European diesel demand, hindered by Russian sanctions and shipping hurdles. Analysts note that uncertainty arising from restricted U.S. refinery production due to scheduled maintenance operations is also contributing to the increase in prices.
Brent crude futures closed with a rise of 91 cents, reflecting a 1.11% increase that set the price at $82.53 per barrel. On the other hand, U.S. West Texas Intermediate crude futures (WTI) ended the day $1.09 higher, a 1.43% increase, pushing the price to $77.58.
Global Disruptions Affect Diesel Supply
"Everyone's attention is on the diesel," commented John Kilduff, a partner at Again Capital LLC. He shed light on the deep plunge in U.S. refining activities paired with global trade disturbances, culminating in a tightened diesel supply in recent weeks. This has led to an unprecedented decrease in the amount of U.S. diesel exported to Europe this month.
U.S. diesel cracks saw an abrupt climb to a four-month high surpassing $48 per barrel this month. This unexpected rise has put a strain on the chances to export the fuel to Europe.
Potential Supply Interruptions Spook the Market
Over the weekend, Houthis, Yemen's Iran-aligned rebels, came very close to hitting a U.S.-flagged tanker. Just last week, a vessel targeted by these rebels was forsaken and has been spotted spilling fuel into the Red Sea, reports the U.S. Central Command. Such potential disruptions to oil production and transport are causing trepidation in the market, asserts Kilduff.
Though early trade on Monday was primarily shaped by worries surrounding the prospect of constant inflation restricting demand, the focus has shifted, states Phil Flynn, an analyst at Price Futures Group. "The problem seems to be revolving back to the matter of supply," Flynn noted. "Demand is high and ultimately, it's all about supply and demand."
Refiners are set to recover their production numbers by March after planned U.S. refinery renovations are completed, Flynn added. Over the past fortnight, U.S. refinery usage has maintained a steady 80.6% of the national capacity, according to data from the U.S. Energy Information Administration last week.
Ongoing Supply & Demand Woes Amid International Conflicts
Oil prices have been fluctuating between $70 and $90 per barrel since November. Despite ongoing conflicts in Ukraine and Gaza, increasing U.S. supplies and worries about weak Chinese demand have managed to counterbalance the supply cuts orchestrated by OPEC+.
The continuing discord between Israel and Hamas in the Middle East persists, and negotiators from the United States, Egypt, Qatar and Israel have reached an agreement on the basic parameters of a hostage deal during discussions in Paris. However, negotiations are ongoing, White House national security advisor Jake Sullivan shared with CNN on Sunday.
