Mar Rosso

Oil prices heat up, +6% in a week. What happens to crude oil?

The price of oil is rising again, in a mix of events and economic prospects that leave investors in the raw material and politicians – attentive to fuel costs – in a climate of maximum alert.
Brent and WTI prices continue to fluctuate at the beginning of the year and for the second consecutive week they recorded a rise and settled at the highest levels in almost two months on the trading day of Friday 26 January.
Positive economic growth in the United States and signs of Chinese stimulus fueled demand expectations, while supply concerns in the Middle East added support.
What to expect on the price of oil? All the factors to keep under control.
Red Sea War Effect on Oil Price Brent and WTI futures posted weekly gains of more than 6%, marking the biggest 7-day increase since the week ending Oct.
13, after the start of the Israel-Hamas conflict in Gaza .
Crude's advance has been underpinned by elevated tensions in the Middle East and the Red Sea, with the United States striking Iran-backed Houthi rebels in Yemen to force them to halt attacks on commercial ships.
read also So oil changes course with the danger in the Red Sea The latest news concerns an oil tanker operating on behalf of Trafigura hit by a missile on Friday 26 January after passing through the Red Sea.
The Marlin Luanda, an oil product tanker, was attacked by missiles in the Gulf of Aden.
Houthi militants claimed responsibility for the attack, describing the vessel as a "British oil vessel".
Trafigura said the vessel is flagged in the Marshall Islands.
US Navy ships fired on a Houthi anti-ship missile in Yemen a few hours later.
Many of the world's major oil companies have suspended traffic to the Red Sea in this increasingly worrying context of war.
So far, oil futures have not seemed particularly shaken by escalating tensions in the Middle East, as there has been no major supply disruption.
Analysts have warned, however, that a direct confrontation between the United States and Iran could cause prices to rise significantly.
Robert Thummel, portfolio manager at Tortoise Capital, told CNBC that the market is not pricing in enough geopolitical risk into crude prices.
Supply concerns are evident in the structure of Brent futures.
The first-to-six month contract premium on both Brent and WTI rose to the highest since November, indicating perceptions of tighter supply.
A potential fuel supply disruption from a Ukrainian drone attack on an export-oriented oil refinery in southern Russia also supported prices.
How important are China and the USA for the price of crude oil? It's not just the supply of crude oil that is under the spotlight of analysts.
On the demand side, the United States, the world's biggest oil consumer, posted faster-than-expected economic growth in the fourth quarter, data showed on Thursday.
Furthermore, this week sentiment was also supported by the latest measures adopted by China to revive growth.
Without a doubt, a favorable economic climate in the US and in the Dragon pushes the price of crude oil, as it fuels prospects of rising demand in a context of fragile supply.
read also USA-China, who wins in the economic war? The answer in 3 graphs A mix of factors has in short inflamed crude oil prices in just one week, as explained by the analysis of expert Tim Evans on Reuters: the economic stimulus from China, the growth of US GDP in the fourth quarter stronger than expected, cooling U.S.
inflation data, ongoing geopolitical risks and a larger-than-expected 9.2 million barrel decline in U.S.
commercial crude inventories over the past week have all combined to push prices higher.

Author: Hermes A.I.

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