Oil Trades Flat Amidst Supply Concerns
Crude oil prices traded flat on Tuesday amidst supply concerns and geopolitical unrest. Prices for Brent and West Texas Intermediate fell precipitously on the market due to growing uncertainty about demand.
However, ICE Brent rebounded to $86.75 per barrel before the close of business. The Joint Ministerial Monitoring Committee of OPEC+ will be meeting next week, and the committee is unlikely to recommend any changes to the current production cuts agreement until the end of the second quarter of this year, ING said in a note.
Meanwhile, the uncertainty over Venezuelan supply lingers as the current sanction relief comes to an end in April 2024, and the US is yet to decide on further relief. Media reports suggest that some buyers, including India, have already started cutting oil purchases from the country amid the uncertainty.
Due to worries about supply constraints, European natural gas prices surged to intraday highs of EUR29/MWh yesterday, continuing their upward trend for a second straight session.
Reports suggest that Russia’s recent drone attack targeted an underground gas storage facility in western Ukraine. However, there are no reports of major damage to the underground storage facility.
This led to supply jitters in the market. The European gas market remains well-supplied currently, with tanks at 59% full compared to a seasonal average of around 42%.
Recall that the oil market opened higher this week after trading soft for three consecutive days last week amid global tensions. ICE Brent prices recovered to around $86 following a terrorist attack in Russia over the weekend.
Meanwhile, continued drone attacks by Ukraine on Russian oil refineries keep the risk premium for the oil market higher. Weekly data from Baker Hughes shows that US oil rigs fell by one rig over the last week, with the total oil rig count reaching 509 for the week ended 22 March 2024, according to ING.
Analysts said the strength in oil prices will keep supporting the investments in oil exploration activities. Gas rigs fell by four to 112 over the reporting week, primarily due to suppressed gas prices.
This was the lowest rig count since January 2022. The total rig count (oil and gas combined) stood at 624 over the reporting week, down from 629 a week earlier. #Oil Trades Flat Amidst Supply Concerns Naira Devaluation Deepens Economic Crisis in Nigeria
