Middle East tensions cause an increase in oil prices

Middle East tensions cause an increase in oil prices

Middle East tensions cause an increase in oil prices

In the first week of the year, both benchmarks finished higher, but crude oil fell on Thursday due to a large increase in US gasoline and distillate stockpiles.

The closing price of Brent oil futures was $78.76 a barrel, up $1.17 or 1.51%. West Texas Intermediate oil futures for the United States finished at $73.81, up $1.62, or 2.24%.

With US Secretary of State Antony Blinken embarking on a week-long tour to the Middle East to try and ease regional tensions stemming from the Israel-Hamas war, oil prices started to rise on Friday.

The closing price of Brent oil futures was $78.76 a barrel, up $1.17 or 1.51%. West Texas Intermediate oil futures for the United States finished at $73.81, up $1.62, or 2.24%.

In the first week of the year, both benchmarks finished higher, but crude oil fell on Thursday due to a large increase in US gasoline and distillate stockpiles.

"The geopolitical trade premium will need to rise further as tensions in the Middle East rise," said Again Capital LLC partner John Kilduff. "It's hard for speculators to fight the headlines."

Maersk, a major shipping company, said that it would soon be rerouting all of its ships out of the Red Sea, citing potential disruptions for its clientele.

According to Kilduff, a US government data indicating December job growth will bolster demand going forward.

With salaries rising gradually and U.S. firms hiring more workers than anticipated in December, financial markets were buoyed by hopes that the Federal Reserve would begin reducing interest rates in March.

According to the Labor Department, nonfarm payrolls rose by 216,000 jobs in the previous month. A Reuters survey of economists projected that salaries would increase by 170,000 jobs.

According to Kilduff, "strong employment should signal strong fuel demand."

Because of its long-term oil price projection, Bank of America stated it is adopting a cautious posture with regard to oil stocks.

It said that it anticipated the Brent trading range of $70-$90 per barrel to remain after OPEC+ intervention, but it also stated that a "permanently backward-looking oil curve fueled by excess capacity" is a drag for the value of the area.

According to Baker Hughes, an oilfield services business, the number of active drilling rigs—that is, rigs for both natural gas and oil—dropped by one last week to 621, marking the third drop in the previous four weeks.

Drilling rigs for natural gas decreased to two from 118, while those for crude oil increased to 501.

The US Commodity Futures Trading Commission (CFTC) reported on Friday that money managers reduced their net long holdings in US crude futures and options in the week leading up to January 2.

Throughout the time, the speculator group decreased its total position in futures and options in New York as well as London by 33,051 contracts to 51,215 contracts.