Crude Oil Trading Alert: Supply disruptions have led to rising market tensions, and oil prices rose 2% to a new high in nearly four weeks
Extreme cold weather continued to hamper U.S. crude oil production on Monday, and oil prices rose about 2% due to concerns about global energy supplies after a Ukrainian drone attacked Russia’s Novatek company.
The settlement price of WTI crude oil futures closed up 2.42%, or US$1.78/barrel, to close at US$75.19/barrel; the intraday high reached US$75.43/barrel, a new high since December 27. Meanwhile, Brent March crude oil futures settled at $80.06 per barrel, up $1.50, or 1.9%. The highest intraday increase was 2.19%.
Supply shortages are causing concerns about the contradiction between supply and demand, with Russia’s crude oil processing volume further declining. This is due to the decline in output of the Norsi refinery, leading to lower gasoline production and decreased overall processing volume. Additionally, U.S. Gulf Coast refineries are gradually recovering from the impact of Winter Storm Gerri, with total production capacity offline decreasing from last week.
Libya’s Sharala oil field has resumed production, which has led OPEC members to ignore production cuts implemented by Saudi Arabia. This has increased supplies and put pressure on imports of petroleum products. The latest forecasts for demand growth in 2024 range from 1.24 million to 2.25 million barrels per day, with expectations that demand growth will slow down in 2025.
Geopolitical factors, such as the EU’s Red Sea escort operation and Israel’s offensive in Gaza, are also influencing crude oil prices. These developments, combined with the potential for future policy easing in major Asian countries, could weaken demand for oil in the coming months.
As traders look ahead to central bank meetings and economic data this week for fresh impetus, key financial data and events to watch on Tuesday include the Bank of Japan’s interest rate decision and outlook report, as well as the release of global PMI flash and U.S. fourth-quarter GDP data. These events are expected to bring some volatility to oil prices.