Market Jitters, US Output Recovers: Despite OPEC Optimism, Oil Loses Momentum

19 Jan 2024 , 10:26 AM

After a spike the previous day, oil prices continued to decline on Friday as worries over China’s sluggish demand growth offset geopolitical tensions and disruptions in U.S. oil output due to a cold snap.

U.S. West Texas Intermediate crude futures (WTI) had down 3 cents to $74.05, while Brent crude futures had dropped 17 cents, or 0.2%, to $78.93 per barrel.

Both benchmarks are expected to close the week roughly 1% to 2% higher after rising roughly 2% on Thursday when the International Energy Agency (IEA) and producer club OPEC both predicted rapid growth in the world’s oil demand.

On Thursday, Pakistan retaliated by striking separatist terrorists inside Iran, two days after Tehran claimed to have hit the bases of a different organization inside Pakistani territory.

Ship-tracking data indicated that two oil tankers that had veered away from the Red Sea had reversed course and crossed the Bab al-Mandab Strait, but tensions in the area persisted in interfering with international commerce and trade.

The U.S. Energy Information Administration (EIA) on Thursday revealed that, in the week ending January 12, refineries’ robust demand resulted in a larger-than-expected drop in crude stockpiles of 2.5 million barrels; nonetheless, inventories of gasoline and distillate reached multi-year highs.

As a result of severe cold and technical difficulties, over 40% of North Dakota’s oil output—one of the top oil-producing states in the union—remained suspended, the state’s pipeline authority reported on Wednesday.

Though it is still less than OPEC’s projection, the IEA boosted its 2024 global oil demand growth forecast on Thursday and said that the market was well supplied due to robust growth outside the producer group.

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