Oil Prices Surge on Tight Supply from OPEC+ Members
Oil prices surged in the global commodities market due to tight supply from the Organisation of Petroleum Exporting countries and allies (OPEC+); expectations of higher global demand from cold weather and a drop in US heating oil inventories.
The international benchmark Brent crude rose by 0.4% to $77.24 per barrel. The US benchmark West Texas Intermediate (WTI) increased by 0.4% to $73.95 per barrel, compared to its prior session close of $73.67. Oil prices climbed on Friday, supported by market players’ anticipations that there will be an increase in oil demand due to the impact of cold weather.
Data from the US Energy Information Administration (EIA) showed heating oil stockpiles declined by 632,000 barrels for the week ending January 3. US heating oil futures rose above $2.38 per gallon in January, driven by a decline in US crude inventories for the seventh consecutive week and a drop in seaborne exports from Russia to their lowest level since August 2023.
Meanwhile, a state of energy emergency was declared in Wisconsin, US, in response to severe weather challenges that disrupted the supply of heating and transportation fuels, further supporting higher prices.
Governor Tony Evers announced that he signed the executive order ‘due to persistent challenges caused by severe regional winter weather and its impact on the distribution of residential heating fuel, including heating oil and propane.’
Experts also warned that the cold weather could adversely affect oil production and refinery operations in the US.
Analysts expect global oil demand to remain strong throughout January as colder weather boosts fuel consumption and travel activity increases ahead of the Chinese New Year holiday, a 15-day festival from January 21 to February 20.
Furthermore, reports indicating that oil supply from Russia and OPEC members remained weak in December continued to raise concerns of tightening global supply, driving prices upward.
The OPEC+ group, which consists of OPEC, led by Saudi Arabia, and non-OPEC oil-producing countries, led by Russia, implemented supply cuts of about 5.85 million barrels per day, including voluntary production cuts. #Oil Prices Surge on Tight Supply from OPEC+ Members
