Oil prices bounced once again today to two-week highs as tensions in the Red Sea stoked worries over potential supply disruptions.
The “longer-term impact on oil prices of Houthis’ attacks on oil tankers through the Red Sea is a complicated one, but the attacks do have immediate repercussions: delay in delivery of crude and higher shipping costs,” said Fawad Razaqzada, market analyst at City Index and FOREX.com, in emailed commentary.
Given that, “the oil price gains are justified,” he said in market commentary.
Still, it’s “very difficult to say how long the gains will last for, or how much higher will prices go from here on, just on the back of this factor alone.”Analysts expected a third straight week of crude draws…API
API reported a 939k barrel crude inventory build, ending the streak of draws (and opposite to the expectations. Stockpiles at the Cushing Hub rose for the 9th week in a row and products also saw builds
Source: BloombergWTI was hovering around $74.25 ahead of the API print and limped lower after the unexpected build…
Despite the current rally, some traders don’t anticipate long-term price impacts for crude, and timespreads – a critical barometer for supply and demand – continue to indicate weakness.WTI’s prompt spread, the difference between its January and February contracts, settled at 50 cents in contango, signaling an abundance of barrels available in the near term.“As the holiday season approaches, a stable outcome for the region looks elusive,” said Stephen Innes, managing partner at SPI Asset Management, in market commentary.“The longer the war in Gaza rages on, the escalating humanitarian crisis may intensify political pressure on various actors, potentially leading to an expansion of the conflict.”And “in the midst of rocket attacks and bombings, the fog of war increases the likelihood of unpredictable events and significant miscalculations, potentially resulting in further escalation,” said Innes.More By This Author:Orange Juice, Cocoa, Coffee Are The Hottest CommoditiesGoolsbee Grounds Bond-Bulls But Bitcoin, Black Gold, And Big-Tech BounceA Shocking 40% Of Student Loan Borrowers Missed First Payment After Pandemic-Era Freeze Expired
