Sibel Morrow and Duygu Alhan
07 February 2024•Update: 07 February 2024
ANKARA
Oil prices were mixed on Wednesday, buoyed by easing supply-side concerns as the US lowered output expectations and with a less-than-projected rise in crude stockpiles, while hopes of a truce in the Israel-Gaza war allayed fears of supply disruptions and curbed price upticks.
The international benchmark crude Brent traded at $78.54 per barrel at 10.19 a.m. local time (0719 GMT), a 0.06% fall from the closing price of $78.59 a barrel in the previous trading session on Tuesday.
The American benchmark, West Texas Intermediate (WTI), traded at the same time at $73.39 per barrel, up 0.10% from Tuesday’s close of $73.31 per barrel.
Widespread optimistic sentiment across global markets buoyed price rises.
According to the US Energy Information Administration’s (EIA) Short-Term Outlook released on Tuesday, the US has revised its growth expectations for 2024, predicting that oil production will level off for the majority of the year.
This adjustment comes after production declined from a record high of 13.3 million barrels per day (bpd) in December to 12.6 million bpd in January. Production rates are not expected to hit further high levels until 2025, except for a rebound in February.
Alleviating concerns about a potential supply glut in the first quarter of the year, the EIA’s revised output predictions contributed to positive market momentum and exerted downward pressure on oil prices.
Additionally, the American Petroleum Institute (API) late Tuesday announced an increase of 674,000 barrels in US crude oil inventories, against the market expectation of a build of 2.133 million barrels.
However, although the data indicated a fall in the world's biggest oil-consuming country's oil demand, the lower-than-expected rise in stocks supported oil price increases.
Easing geopolitical tensions and supply disruptions
One of the world's most popular marine routes for the shipment of oil and fuel is increasingly vulnerable to supply chain disruptions due to the persistent tension in the Red Sea caused by the Israel-Palestine conflict, which is driving up costs.
However, the increased likelihood of a settlement in the Israel-Palestine conflict alleviated concerns about supply interruptions and restrained additional price rises.
The US Secretary of State, Antony Blinken, said on Tuesday he would discuss Hamas' response to a cease-fire proposal with Israel in Tel Aviv on Wednesday.
Blinken had previously visited Saudi Arabia, Egypt and Qatar to hold discussions about the truce between Israel and Palestine.
"Hamas responded to the cease-fire framework agreement. We are reviewing that response. I will be discussing it with the government of Israel tomorrow,'' Blinken said at a news conference with his Qatari counterpart, Mohammed bin Abdulrahman bin Jassim Al Thani, in Doha.
Blinken noted that an agreement to renew and broaden a cease-fire and secure the release of hostages would be the best path forward for advancing a prolonged cease-fire in Gaza.
Despite the easing of certain geopolitical risks, market sentiment remains cautious due to the US's commitment to intensifying military action against Iran's forces and its proxies in the Middle East.
