Brent crude was trading at $78.47 a barrel at 03:53 am GMT on Monday, January 22, according to an early analysis of oil prices.
According to Reuters, prices struggled to gain traction as economic uncertainty weighed heavily on the outlook for global oil consumption, despite geopolitical concerns in the Middle East and a recent attack on a Russian fuel export station.
“Brent crude fell by 9 cents, or 0.1%, to $78.47 a barrel by 0353 GMT, following a 54-cent drop on Friday.
“Meanwhile, the front-month U.S. West Texas Intermediate crude futures for February delivery rose 11 cents to $73.52 a barrel, as the contract neared its expiration on Monday. The more active March WTI contract stood at $73.21 a barrel, down by 4 cents.”
According to reports in the Middle East, continuous conflicts, such as the Gaza war and a US strike on a Houthi missile in the Gulf of Aden, have exacerbated geopolitical tensions.
Despite geopolitical concerns, including an alleged Ukrainian drone strike on a major Russian fuel export station, oil prices showed little fluctuation.
A Russian company, Novatek, reported a fire at the Baltic Sea terminal, which has caused certain operations to be suspended. Experts speculated that the low market reopening reflected current attitude in the crude oil market.
Last Thursday, oil prices had fallen to $77 per barrel, which is far from the September average of $94/bbl, reversing all gains made in 2023 Q3.
Regardless of these developments, crude oil appeared set 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 disrupted global trade, causing European and African crude prices to tighten.
The first-month Brent contract’s premium over the six-month contract increased to $1.99 on Friday, indicating a belief of tighter supply for rapid delivery, often known as backwardation.
IG’s Sycamore emphasized the current challenges for oil prices, citing rising production, conflicting growth outlooks in China and Europe, and an expected slowdown in the US economy, as suggested by impending GDP statistics.
Several organizations, including the United States Energy Information Administration, the International Energy Agency, and the Organization of Petroleum Exporting Countries, have offered a wide range of demand growth predictions for 2024, ranging from 1.24 million to 2.25 million barrels per day.
