Oil declined following last week’s advance after Iran’s foreign minister flagged the Israel-Hamas conflict could be moving closer to a diplomatic solution.
Trading remained muted with many Asia markets closed for Lunar New Year holidays.
Brent fell as much as 0.8% to below $82 a barrel, after gaining 6.3% last week, while West Texas Intermediate traded near $76.
Iran’s Hossein Amirabdollahian held talks in recent days in Beirut, including with senior officials from Hamas. “Developments in Gaza are moving toward a diplomatic solution,” he said, without offering any specifics on timing.
Meanwhile, the Israeli military conducted a series of strikes in Gaza on targets in the southern city of Rafah. Prime Minister Benjamin Netanyahu had said on Sunday that civilians would be directed out of harm’s way before a military operation.
Oil has traded within a band of about $10 for most of this year as nervousness over the conflict in the Middle East has been partially offset by ample global supply and a shaky demand outlook — especially in China, the second-biggest consumer.
Production from the Permian Basin of West Texas and New Mexico — which helped the US export an unprecedented volume last year — is seen hitting another record this year. Output is said to rise almost 5% to 6.4 million barrels a day by the end of 2024, major pipeline operator Plains All American Pipeline LP said in its fourth-quarter earnings presentation.
There are additional downside risks to demand forecasts for China, Goldman Sachs Group Inc. analysts said in a note, citing a surge in electric vehicle sales and conversations with local consumers.
Traders will this week be looking to monthly reports from both OPEC and the International Energy Agency for further indications of supply and demand.
Crude Oil Dips Slightly on Friday Amid Demand Concerns
On Friday, global crude oil prices experienced a slight dip, primarily attributed to mounting concerns surrounding demand despite signs of a tightening market.
Brent crude prices edged lower, nearing $83 per barrel, following a recent uptick of 1.6% over two consecutive sessions.
Similarly, West Texas Intermediate (WTI) crude hovered around $78 per barrel. Despite the dip, market indicators suggest a relatively robust market, with US crude inventories expanding less than anticipated in the previous week.
The oil market finds itself amidst a complex dynamic, balancing optimistic signals such as reduced OPEC+ output and heightened tensions in the Middle East against persistent worries about Chinese demand, particularly as the nation grapples with economic challenges.
This delicate equilibrium has led oil futures to mirror the oscillations of broader stock markets, underscoring the interconnectedness of global economic factors.
Analysts, including Michael Tran from RBC Capital Markets LLC, highlight the recurring theme of robust oil demand juxtaposed with concerning Chinese macroeconomic data, contributing to market volatility.
Also, recent attacks on commercial shipping in the Red Sea by Houthi militants have added a risk premium to oil futures, reflecting geopolitical uncertainties beyond immediate demand-supply dynamics.
While US crude inventories saw a slight rise, they remain below seasonal averages, indicating some resilience in the market despite prevailing uncertainties.
Nigeria’s Oil Rig Count Soars From 11 to 30, Says NUPRC CEO
The Chief Executive Officer of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Gbenga Komolafe, has announced a surge in the country’s oil rig count.
Komolafe disclosed that Nigeria’s oil rigs have escalated from 11 to 30, a substantial increase since 2011.
Attributing this surge to concerted efforts by NUPRC and other governmental stakeholders, Komolafe highlighted the importance of instilling confidence, certainty, and predictability in the oil and gas industry.
He explained the pivotal role of the recently implemented Petroleum Industry Act (PIA), which has spurred significant capital expenditure amounting to billions of dollars over the past two and a half years.
Speaking in Lagos after receiving The Sun Award, Komolafe underscored the effective discharge of NUPRC’s statutory mandate, which has contributed to the success stories witnessed in the sector.
The surge in Nigeria’s oil rig count signifies a tangible measure of vibrant activities within the upstream oil and gas sector, reflecting increased drilling activity and heightened industry dynamism.
Also, Komolafe noted that NUPRC has issued over 17 regulations aimed at enhancing certainty and predictability in industry operations, aligning with the objectives outlined in the PIA.
Oil Prices Rebound in Asian Markets Amid Red Sea Shipping Concerns
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