An initial assessment of oil prices on Monday, Jan 22, revealed that the price of Brent crude was $78.47 per barrel at approximately.
According a report by Reuters, prices had difficulty gaining traction due to economic uncertainties that heavily influenced the global oil demand forecast, offsetting geopolitical tensions in the Middle East and a recent assault on a Russian fuel export terminal.
“Brent crude fell slightly by 9 cents, or 0.1%, settling at $78.47 a barrel, following a 54-cent drop on Friday. In contrast, the front-month U.S. West Texas Intermediate crude futures for February delivery rose slightly by 11 cents to $73.52 a barrel, with the contract approaching its expiration on Monday. The more active March WTI contract was at $73.21 a barrel, down by 4 cents.”
The ongoing conflicts, including the Gaza war and a U.S. strike on a Houthi missile in the Gulf of Aden, have contributed to the geopolitical complexities.
Oil prices showed little change despite these geopolitical concerns, especially an alleged Ukrainian drone attack on a significant Russian fuel export terminal.
Russian producer Novatek announced a halt to some operations at the Baltic Sea terminal due to a fire. Experts believe that the subdued market reopening reflects the current sentiment in the crude oil market.
Last week, oil prices had dropped to $77 per barrel, a significant decrease from the average of $94/bbl in September, reversing all the gains made in Q3 2023.
Despite these events, crude oil seemed poised for rangebound trading with some downward pressure, according to Vandana Hari, founder of oil market analysis provider Vanda Insights.
Attacks in the Red Sea and the Gulf of Aden have disrupted global trade, tightening European and African crude markets.
The first-month Brent contract’s premium over the six-month contract expanded to $1.99 on Friday, indicating a perception of tighter supply for immediate delivery, known as backwardation.
IG’s Sycamore pointed out the existing challenges for oil prices, citing increased production, mixed growth prospects in China and Europe, and an expected slowdown in the U.S. economy, as suggested by forthcoming GDP data.
Various organizations, including the U.S. Energy Information Administration, the International Energy Agency, and the Organization of the Petroleum Exporting Countries, offered a broad range of demand growth forecasts for 2024, ranging from 1.24 million to 2.25 million barrels per day.