SINGAPORE: Oil prices are on track to register their third consecutive week of gains – a feat not achieved since April. Despite a slight dip on Friday, concerns about disruptions in Libya and Nigeria’s supply, coupled with hopes of increased demand for U.S. crude amid cooling inflation, have contributed to the positive performance.
Both Brent crude futures and U.S. West Texas Intermediate crude futures are currently trading slightly lower. Brent is down 20 cents at $81.16, while WTI is trading 14 cents lower at $76.75 as of 0634 GMT.
It is worth noting that both contracts had risen for three consecutive sessions, ending on Thursday, and continued to show strength in early Asian trade on Friday.
On Thursday, certain oilfields in Libya were shut down due to a local tribe’s protest against the kidnapping of a former minister. Additionally, Shell has suspended loadings of Nigeria’s Forcados crude oil due to a potential leak at a terminal.
ANZ Research estimates that protests in Libya alone could lead to a daily loss of more than 250,000 barrels of oil from the market.
Edward Moya, an analyst at OANDA, commented on the situation, saying, “Crude prices are gaining momentum as we anticipate tight market conditions with disruptions in Libya and Nigeria, alongside declining Russian crude exports.”
This month, Saudi Arabia and Russia, the world’s largest oil exporters, agreed to deepen oil cuts that have been in place since November last year. This decision has provided further support to crude prices.
In a recent update, the Organization of the Petroleum Exporting Countries (OPEC) raised its oil demand forecast for 2023 and predicted a 2.2% growth in demand for 2024.
The National Australia Bank also commented on the OPEC forecast, stating that if it becomes a reality, oil prices could reach well above $100 per barrel. The bank also highlighted the positive impact of the weakening U.S. dollar on commodity prices.
In June, U.S. consumer prices experienced a modest increase, with the smallest annual rise in over two years. Producer prices also saw minimal growth in June, marking the smallest annual increase in almost three years.
These indicators have given markets hope that the U.S. Federal Reserve may be nearing the end of its aggressive monetary policy tightening campaign, which is the most rapid seen since the 1980s. – Reuters
Credit: The Star : Business Feed
