Oil prices were essentially flat early on Friday morning in quiet trade, but were on track for their first weekly gain in four weeks as tension around a key Middle Eastern chokepoint lent support to the price of oil earlier this week.
The global crude oil supply picture indicates that the market is going to tighten further, while oil demand is still holding up pretty strong, Helima Croft, RBC Capital Markets managing director of global head of commodity, told CNBC’s Squawk Box on Friday.
The market right now is “very constructive for oil prices, particularly as we are going to the last quarter of the year”, with so many Iranian barrels coming off the market, Croft said.
With WTI Crude at around $70 a barrel now, the WTI price at the end of the year will very much depend on the Middle East, as there are many ‘intangibles’ including issues with key chokepoints in the Middle East, issues with shipping, issues with Iranian exports—there are a lot of factors that will come out and play in terms of where the price goes, Croft told CNBC.
Earlier this week, Saudi Arabia halted crude oil and oil product shipments via the Bab el Mandeb chokepoint in the Red Sea after an attack by the Iran-aligned Houthis on two Saudi tankers near the port of Hodeidah.
This Saudi halt of shipments via the chokepoint supported oil prices on Thursday, after they had stabilized on Wednesday when the EIA reported a draw in crude oil and another draw in gasoline inventories for the week to July 20. Crude oil inventories were 6.1 million barrels lower in July 16-20 than in the week before, when the EIA reported a surprise build that made the price rally stutter.
By Tsvetana Paraskova for Oilprice.com
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