Brent sheds following initial ceasefire deal in Gaza
The front-month ICE Brent contract has moved $0.18/bbl lower on the day, to trade at $81.64/bbl at 09.00 GMT.
PHOTO: Silhouette of an oil pumping unit. Getty Images
Upward pressure:
Brent’s price has remained well above $80/bbl this week, as cold weather conditions in the US drove oil demand up.
Oil prices have found support from the “prevailing colder-than-normal northern hemisphere winter,” VANDA Insights’ founder and analyst Vandana Hari remarked.
Commercial US crude oil inventories declined by 1.96 million bbls to touch 412 million bbls for the week ending 10 January, according to data from the US Energy Information Administration (EIA).
A drop in US crude stocks indicates growth in oil demand in the US, the world’s largest oil consumer.
Oil investors are now waiting for China's fourth-quarter 2024 gross domestic product (GDP) data, which will be out later today. According to market analysts, the data is expected to show growth from the third-quarter reading.
“Attention will turn to the slew of China’s economic data ahead, with its 4Q gross domestic product (GDP) expected to show a 5% year-on-year (YoY) growth, up from 4.6% in Q3,” IG Bank market strategist Yeap Jun Rong said.
The Chinese government has repeatedly attempted to revive the country’s economy with new stimulus packages, hoping to support its manufacturing sector and boost oil demand.
Downward pressure:
Brent futures felt some downward pressure following media reports, which suggest that the incoming Donald Trump administration is considering a different approach to the recent sanctions placed against Russia’s energy sector.
President-elect Trump, who takes office on 20 January, has vowed to resolve the ongoing conflict in Eastern Europe with a peace deal between Russia and Ukraine.
“Crude oil retreated amid reports that Trump’s advisors were crafting a strategy that could see sanctions on Russia’s oil industry lifted,” ANZ Bank’s senior market analyst Daniel Hynes commented.
The exiting Joe Biden's administration announced new and stricter sanctions last week, which could dramatically impact Russia’s oil exports, according to market analysts.
Oil prices felt more pressure after a six-week initial ceasefire deal was reached between Israel and the Iran-backed Hamas armed group.
Brent’s price gains were modestly capped by “the Israel-Hamas Gaza ceasefire deal, and speculation over the Donald Trump administration’s approach to the Gaza and Ukraine wars as well as Iran and Venezuela, once it takes over the reins in the US on Monday, January 20,” Hari added.
By Aparupa Mazumder
Please get in touch with comments or additional info to news@engine.online
