Oil Market Mixed as Middle Eastern Supply Concerns Ease

March 12, 2024
crude oil market

By Adedapo Adesanya 

The oil market was mixed on Monday as concerns eased that fighting in the Middle East would disrupt supply and Chinese data suggested weak demand.

At the trading session, Brent crude traded at $82.21 a barrel after gaining 13 cents, and US West Texas Intermediate (WTI) crude slipped by 8 cents to $77.93 a barrel.

Both benchmarks ended last week lower after bearish Chinese data implied weaker demand in the world’s leading crude importer.

China’s crude oil imports rose in the first two months of the year compared with the same period in 2023 but were weaker than the preceding months, data showed last Thursday, continuing a trend of reduced purchases.

Meanwhile, oil investors seemed to overlook the geopolitical conflict that was initially seen as tightening global crude supplies. However, the Middle East conflict has not led to meaningful supply disruptions.

Yemen’s Iran-aligned Houthis have been attacking ships in the Red Sea and Gulf of Aden since November in retaliation for Israel’s war against Hamas, which started in October 2023.

According to the US military, over the weekend, dozens of drones were downed by US, French, and British forces in the Red Sea area after Houthis targeted ships in the region.

On Monday, an explosion in the vicinity of a vessel 71 nautical miles southwest of Yemen’s port of Saleef was reported.

Separately, the United Kingdom Maritime Trade Operations (UKMTO) agency said it had received a report of the sound of an explosion in the vicinity of a vessel 71 nautical miles southwest of Yemen’s port of Saleef. The vessel and crew were safe, UKMTO added.

The oil market will be anticipating the inflation data, which is due on Tuesday. The reading will be instrumental in understanding if interest rate cuts are to be expected.

Meanwhile, job growth accelerated in February in the world’s largest economy, but a rise in the unemployment rate and an ease in wage gains kept the anticipated June interest rate cut on the table.

Also, an increase in refining activity in the world’s largest oil producer, which could tighten global crude supplies, has helped to limit any fall in oil prices.

The US produced more crude oil than any other country in 2023, for the sixth year in a row, with production averaging 12.9 million barrels per day, up from 12.3 million barrels per day in 2019, which set a global record at the time, according to the Energy Information Administration (EIA).

Adedapo Adesanya

Adedapo Adesanya is a journalist, polymath, and connoisseur of everything art. When he is not writing, he has his nose buried in one of the many books or articles he has bookmarked or simply listening to good music with a bottle of beer or wine. He supports the greatest club in the world, Manchester United F.C.

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