01/16/2024 – 17:09
Oil closed without a single direction this Tuesday, the 16th, after a session of marked volatility and a strong dollar. Investors adjust expectations about how tight the market will actually be, weighing risks from tensions in the Red Sea to supply and the prospect of weak demand.
On Nymex, the metals division of the New York Mercantile Exchange (Nymex), WTI oil for February fell 0.38% (US$0.28), to US$72.40 per barrel. On the Intercontinental Exchange (ICE), Brent for March closed up 0.24% (US$0.14), at US$78.29 a barrel.
The commodity traded higher for much of the morning as investors monitored the global supply implications of escalating conflicts in the Middle East.
A Dow Jones Newswire reported that Shell has indefinitely suspended the transport of products through the Red Sea, amid Houthi attacks on commercial vessels in the region. US National Security Advisor Jake Sullivan said his country continues to “reserve the right to take further action” against the rebels.
The possibility of supply disruptions has been one of the most monitored risks since the outbreak of the war between Israel and Hamas. But the price of oil lost momentum throughout the session.
“Surprisingly, the most recent escalation of tensions in the Middle East did not trigger a jump in prices. We think this is due to the fact that, so far, oil production has not been affected,” commented Capital Economics in a report. “Furthermore, we suspect this also reflects concerns about weak demand, strong supply growth elsewhere and a market view that a broader conflict is unlikely.”
The rise in interest rates on Treasuries and the dollar this Tuesday helped to put pressure on prices, after speeches by the director of the Federal Reserve (Fed, the North American central bank) Christopher Waller classified as “hawkish” by ANZ.
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