Oil prices witnessed a slight rise today, Wednesday, in light of the continued tensions in the Red Sea, which weighed on supply in Europe and the Middle East. In parallel, the focus began to turn to the return of crude oil production in key regions in the United States, which affected oil prices globally.
Brent crude settled at $79.92 per barrel, gaining 0.47 percent. Meanwhile, U.S. West Texas Intermediate crude prices rose 0.46 percent settling at $74.71 per barrel.
U.S. production rebounds
In North Dakota, the third-largest oil-producing state in the U.S., some oil output resumed following a shutdown caused by extremely cold weather. The state’s pipeline authority reported that production resumed. However, output remained low, witnessing a decrease of 300,000 barrels per day (bpd). This recovery still played a pivotal role in influencing market sentiments.
Meanwhile, persistent weakness in U.S. gasoline demand emerged as another factor impacting oil prices. Hence, the decline in gasoline consumption has influenced oil prices, contributing to the bearish market sentiment. While U.S. crude stocks experienced a significant drawdown of 6.67 million barrels last week, the surge in gasoline inventories by 7.2 million barrels, according to the American Petroleum Institute, acted as a counterforce. The market awaits official U.S. government data today to provide a clearer picture of the overall inventory situation.
Read: Bitcoin hovers below $40,000 following Bitcoin ETF launch
Rising global production
Norway’s crude production recorded an increase to 1.85 million bpd in December, surpassing analysts’ expectations and exacerbating the global oversupply. Additionally, the resumption of production at Libya’s Sharara oilfield, contributing 300,000 bpd, added to the oversupply in the market and the uncertainty in oil prices.
Despite the geopolitical tensions in Europe and the Middle East, oil prices remained relatively stable. While geopolitical pressures were present, they were insufficient to drive a significant rally in the oil market, serving more as a buffer against bottoming out.
Monday saw a temporary uptick in crude prices following a strike on Novatek’s Ust-Luga Baltic fuel export terminal near St. Petersburg. The incident raised concerns about supply disruptions, contributing to a 2 percent increase in oil prices.
The complex interplay between rebounding production, weak demand, and geopolitical uncertainties continues to shape the trajectory of oil prices. It highlights the delicate balance between supply and demand in an ever-evolving geopolitical landscape.
For more markets news, click here.
