Commodities
Oil prices settle lower but notch fourth-weekly gain on demand optimism
Investing.com — Oil prices notched a fourth-weekly despite settling lower Friday, as traders cheered signs earlier this week that usual pick in summer energy demand is underway at time when weather-related supply disruptions remain in focus.
At 14:30 ET (18:30 GMT), fell 1% to $86.54 a barrel, while fell 0.9% to $83.16 a barrel.
Crude prices were headed for a fourth week of strong gains, amid expectations that oil markets will tighten further in the coming months, although trading volumes were muted on account of the U.S. market holiday on Thursday.
Demand optimism in focus; Rig counts unchanged
U.S. travel demand in particular was a key source of this optimism, as analysts forecast record-high travel activity in the world’s biggest fuel consumer through the independence day week.
Bets on stronger demand were furthered by data showing a massive drawdown in U.S. over the past week, as fuel retailers prepared for holiday travel. This week is also expected to have seen sharp drawdowns in crude inventories.
On the supply front, meanwhile, the number of oil rigs remained at 479 from a week ago, Baker Hughes reported Friday. That is well below the 622 rig counts that were operating at the end of the last year, signaling no immediate rush from drillers to boost activity.
“Market sentiment has been supported this week by strong mobility indicators and intensifying geopolitical tension in the Middle East,” analysts at ANZ wrote in a note.
Persistent concerns over supply disruptions in the Middle East also saw traders attach a bigger risk premium to oil prices, as tensions between Israel and Lebanon’s Hezbollah showed little signs of easing.
OPEC oversupply, weak economic readings cool oil gains
But whether oil prices will push further remained doubtful, especially as recent data showed members of the Organization of Petroleum Exporting Countries had increased production in recent months, increasing the likelihood that markets become less tight later this year.
Concerns over slowing economic growth in major oil consumers the U.S. and China also remained in play, especially following weak readings on non-manufacturing purchasing managers index data.
Hawkish signals on U.S. interest rates from the Federal Reserve also factored into some market caution, while traders were on edge ahead of key data due later in the day, which is set to provide more cues on the U.S. economy.
Citi revisits its oil forecasts
Geopolitical tensions and extreme weather events remain risks for oil prices in the near term, according to analysts at Citi, in a note, pointing to conflicts in the Middle East and Hurricane Beryl as examples.
However, despite these factors supporting prices in the $80s a barrel currently, Citi sees reasons for a potential softening later in the year.
“Underlying physical market strength looks set to turn softer,” Citi stated, adding that while demand signals are mixed, with some bright spots like higher-than-expected gasoline demand in the US, it remains lower year-over-year.
Citi maintained its 3-month Brent price target of $82 per barrel, but lowered its 6-12 month target to $72 per barrel, citing a potential supply glut post-summer.
(Peter Nurse, Ambar Warrick contributed to this article.)
(Reuters) – Citi on Wednesday raised its oil price outlook for 2025 due to geopolitical risks centred on Russia and Iran, but noted prices were likely to ease through the second half of the year.
“The oil outlook could see heightened, sustained geopolitical risks in Iran/Russia-Ukraine potentially wipe out the 2025 oil balance surplus, but the Trump administration appears intent on dealmaking,” the bank said in a note.
Citi expects to average $67 a barrel in 2025, up from a previous forecast of $62. It also said it was lifting its average WTI crude forecast to $63/bbl, without giving its former view.
It added that it was revising up its quarterly Brent forecasts to $75/bbl in the first quarter, $68/bbl in the second, $63/bbl in the third, and $60/bbl in the fourth, also without specifying its previous expectations.
The Biden administration on Jan. 10 sanctioned more than 100 tankers and two Russian oil producers, leading to a scramble by top buyers China and India for prompt oil cargoes and a global rush for ship supply as dealers of Russian and Iranian oil sought unsanctioned tankers.
U.S. President Donald Trump has since laid out a sweeping plan to maximise oil and gas production, including declaring a national energy emergency to speed up permitting, rolling back environmental protections, and withdrawing the U.S. from the Paris climate pact.
Citi said the timing and nature of President Trump’s actions regarding Iran and Russia could be defining features of the oil market and pricing during 2025. It forecast a surplus of 0.8 million barrels per day for the year.
By Arunima Kumar
(Reuters) -Oil prices held steady on Wednesday, with traders closely watching President Donald Trump’s proposed tariffs and the potential impact of the national energy emergency he declared on his first day in office.
futures inched 4 cents higher, or 0.05%, to $79.33 per barrel at 1246 GMT. U.S. West Texas Intermediate crude futures edged 2 cents lower, or 0.03%, to $75.81.
“As more details emerge regarding energy production and trade agreements, traders will assess the balance between economic growth, energy security, and policy risks,” said Dilin Wu, research strategist at Pepperstone.
Trump said late on Tuesday that his administration was discussing imposing a 10% tariff on goods imported from China on Feb. 1, the same day that he previously said Mexico and Canada could face levies of around 25%.
He also vowed duties on European imports, without providing further detail.
“The oil market’s attention is slowly turning away from U.S. sanctions against Russia towards President Trump’s potential trade policy,” said ING analysts, adding that the energy complex has come under pressure with the growing threat of tariffs.
The U.S. president had said his administration would “probably” stop buying oil from Venezuela, among the top suppliers of oil to the country.
Trump laid out a sweeping plan to maximise domestic oil and gas production, including declaring a national energy emergency to speed permitting, rolling back environmental protections, and withdrawing the U.S. from the Paris climate pact.
Trump’s policy is unlikely to spur near-term energy investment or change U.S. production growth, analysts at Morgan Stanley (NYSE:) wrote in a note, adding that it could, however, moderate potential erosion of refined product demand.
Meanwhile, a rare winter storm churned across the U.S. Gulf Coast on Tuesday.
Elsewhere, North Dakota’s oil production was estimated to be down by between 130,000 and 160,000 barrels per day (bpd) due to extreme cold weather and related operational challenges, the state’s pipeline authority said on Tuesday.
By Enes Tunagur
LONDON (Reuters) – Oil prices fell on Tuesday as investors assessed U.S. President Donald Trump’s plans to apply new tariffs later than expected while boosting oil and gas production in the United States.
futures were down $1.42, or 1.77%, to $78.73 per barrel at 1116 GMT. U.S. West Texas Intermediate crude futures were down by $1.97, or 2.53%, at $75.91. There was no settlement in the U.S. market on Monday due to a public holiday.
Pressuring prices on Tuesday was a stronger U.S. dollar, as its strengthening makes oil more expensive for holders of other currencies.
“The current weakness is most probably Trump and dollar-related,” said PVM analyst Tamas Varga.
The dollar rebounded after Trump’s comments on imposing tariffs against Mexico and Canada, Varga added, noting that the dollar’s strength is negatively impacting oil prices.
Trump said he was thinking of imposing 25% tariffs on imports from Canada and Mexico from Feb. 1, rather than on his first day in office as previously promised.
“The initial sense of relief that trade measures weren’t an immediate focus on Trump’s ‘Day 1’ was quickly offset by reports of 25% tariffs on Mexico and Canada as early as February, which saw risk sentiments turn,” said Yeap Jun Rong, market strategist at IG.
Trump did not impose any sweeping new trade measures right after his inauguration on Monday, but told federal agencies to investigate unfair trade practices by other countries.
The U.S. president also said his administration would “probably” stop buying oil from Venezuela. The U.S. is the second-biggest buyer of Venezuelan oil after China.
Trump also promised to refill strategic reserves, a move that could be bullish for oil prices by boosting demand for oil.
Also weighing on prices on Tuesday was the potential end to the shipping disruption in the Red Sea. Yemen’s Houthis on Monday said they will limit their attacks on commercial vessels to Israel-linked ships provided the Gaza ceasefire is fully implemented.
“Reopening of the Suez Canal will create a short-term abundance of supply given the shorter journey times, and that may also weigh on prices in the short term,” said Saxo Bank analyst Ole Hansen.
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