The first week of the new year looks set to end with a moderate gain for oil benchmarks fueled by escalating tensions in the Middle East and supply disruptions in Libya.
In the Middle East, Yemen’s Houthis continue to attack ships in the Red Sea, and this week also saw a bomb attack kill some 100 people in Iran. The attack was claimed by the Islamic State although Iran itself said it was a response to its stance on the war between Israel and Gaza.
Across the Red Sea, meanwhile, in Libya, a fresh wave of protests shut down the country’s largest field, Sharara, which can produce up to 300,000 bpd of crude. This is exactly what makes it a magnet for protesters in the area. In this case, the protests originated with local communities demanding more government attention to the southern region of Fezzan.
One of the protesters told Reuters that the region was “in need of developing projects and services, such as a refinery for fuel supply, paved roads, a clinic and providing jobs for young people”.
Countering the bullish effect of these developments, the U.S. Energy Information Administration yesterday reported some of the most substantial inventory builds in fuels even as it also estimated a draw in crude oil stocks to the tune of 5.5 million barrels for the last week of 2023.
According to the EIA, gasoline stocks added close to 11 million barrels during the holiday week, while middle distillate stocks swelled by 10.1 million barrels.
At the same time, the minutes of the last Fed meeting suggested inflation may have finally been put under control, which helped push prices higher, Reuters noted in a report from earlier today. Although the minutes did not contain specific wording regarding rate cuts, the overall tone was optimistic.
At 05:20 AM ET the WTI benchmark traded at $72.90 per barrel, up $0.71 on the day, gaining almost 1%. Brent crude traded at $78.18, rising $0.59 or 0.76%.
By Irina Slav for Oilprice.com
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