Oil headed for a third weekly gain as supply disruptions in Africa and a reduction in shipments from Russia tightened the market.
West Texas Intermediate futures traded near $77 a barrel, up around 4% this week, even as they fluctuated Friday. Protesters shut a major Libyan oil field, Sharara, after output from the smaller El Feel field was already halted Thursday.
Meanwhile, flows from the Forcados oil terminal in Nigeria have been suspended to check for a possible leak. That follows signs that resilient Russian flows are finally starting to decline, four months after the country was due to slash output.
Crude prices remain marginally lower this year, and the International Energy Agency said Thursday that global demand won’t grow as fast as previously expected in 2023 — although it still sees record consumption. The market is expected to tighten in the second half, aided by supply cuts from Saudi Arabia and Russia.
The Organization of Petroleum Exporting Countries expects an even tighter global oil market next year, a view more bullish than those of other forecasters. World oil demand will climb by 2.2 million barrels a day to reach 104.3 million a day, OPEC said on Thursday in its first detailed assessment of 2024.
“There’s a big underlying story about lower inflationary pressure in the US and also in Europe,” which is helping to buoy prices, said Arne Lohmann Rasmussen, head of research at A/S Global Risk Management Ltd. “However, lower inflation could push up commodity prices and we might end up in a situation where inflationary pressure comes back.”
Traders will closely watch for the Federal Reserve’s next move on interest rates, as well as a potential response among G-7 policy makers after prices for Russian crude surged over their cap, said Rasmussen.
Prices:
- WTI for August delivery was little changed at $76.93 a barrel as of 12:35 p.m. in London.
- Brent for September settlement was steady at $81.41 a barrel.
While the oil balance looks tight for the remainder of the year, “from a technical point of view the market is likely to face some strong resistance at the 200-day moving average,” said Warren Patterson, the Singapore-based head of commodities strategy at ING Groep NV.
The US benchmark has surpassed its 50- and 100-day moving averages in quick succession following recent gains, with prices near an 11-week high as physical market supply disruptions hit futures. WTI hasn’t breached the 200-day threshold since August last year, although futures came close in April.
“There’s a good chance we will break the 200-day moving average next week,” Rasmussen said.
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