Oil prices inches up slightly on Tuesday morning after it slid briefly in the previous session, amid a deepening Middle Eastern crisis and rising supplies from OPEC.
During the trading, Brent crude futures went up by 0.2% or 18 cents to reach $76.30 per barrel, while US West Texas Intermediate (WTI) futures rose slightly by 0.1% or 6 cents to reach $70.83 per barrel at 0445 GMT.
Both benchmarks had fallen sharply on Monday, losing 3% and 4% respectively during the trading session fueled by sharp cuts in oil prices by the top exporter, Saudi Arabia and an increase in supply from OPEC.
An analyst at CMC Markets while giving the market’s view on the situation said that, “Saudi Arabia’s sharp price cuts and OPEC’s increased production have offset supply concerns caused by escalating geopolitical tensions in the Middle East.”
The markets also got into a tense condition on the Gaza war after the Israeli military announced that they will continue raging the fight throughout 2024, fueling concerns that the conflict might spread into other regional countries and disrupt the global supply chains.
US Secretary of State Antony Blinken also arrived in Tel Aviv on Monday night to brief the Israeli government on his two-day visit to Arab countries to end the conflict.
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Increased OPEC oil supply
Leaving the Middle Eastern crisis aside for a moment, a survey conducted by Reuters on Friday showed that OPEC has increased its supply of oil in December, as oil prices inches up. This increase in supply was mainly led by Iraq, Nigeria and Angola which offset the continuous production cuts by Saudi Arabia and other OPEC nations.
The high supply levels has forced Saudi Arabia to reduce its official selling price of its Arab light crude being supplied to Asian markets for the month of February, to a level last seen 27 months back.
As per an energy sector analyst at DBS Bank” oil prices will likely be trading in the range of $75 and $80 per barrel in the near future, if nothing unfortunate happens in the Middle Eastern region.
Moreover he added that, “On the supply side, there are some bullish factors from the closure of Libya’s largest oilfield, which has affected around 0.3 million barrels per day of oil production.”
On the other side, the US dollar paused its rally briefly in the Tuesday session, as traders got reassured of a number of interest rate cuts by the Fed this year. A weaker dollar boosts oil prices as commodities become cheaper for holders of other currencies.