Oil prices have risen for five consecutive sessions in response to hopes of an increase in demand driven by colder weather in the Northern Hemisphere as well as new fiscal stimulus measures in China.
Despite a drop in prices yesterday at the market opening, due to the pressure of a stronger dollar, the barrel still remains at its highest level since mid-October. Oil is therefore holding up thanks to the purchasing movement stimulated by the low temperatures and the cold which has set in, but also given the prospects of toughening sanctions on Iranian and Russian exports under the new American administration.
A barrel of Brent lost 33 cents, or 0.4%, to trade at $76.18, its highest since October 14. The same goes for a barrel of West Texas Intermediate, which fell 35 cents to be sold at $73.61, which is also its highest level since last October.
Oil prices have posted five consecutive session gains in response to hopes of increased demand driven by colder weather in the Northern Hemisphere, as well as new fiscal stimulus measures in China. “Brent crude oil was supported by colder than normal weather in northwest Europe and the United States, higher natural gas prices and higher refining profit margins,” Reuters SEB analyst Bjarne Schieldrop.
As for the largest oil exporter, Saudi Aramco announced the increase in crude prices for Asian buyers in February. This is the first increase in three months, which analysts say bodes firmer expectations for demand. But supply is also likely to fall due to tougher Western sanctions on deliveries of Iranian and Russian oil.
“Stricter sanctions”
The Biden administration had already planned to impose “more sanctions against Russia due to its war against Ukraine, and targeting its oil revenues with measures against tankers carrying Russian crude,” sources cited by Reuters.
Separately, US bank Goldman Sachs forecasts a decline in Iranian oil production and exports by the second quarter, “due to expected policy changes and tougher sanctions from the administration of new US President Donald Trump “.
This situation combined with a further drop in production from OPEC member countries – falling by 300,000 barrels per day to 3.25 million bpd by the second quarter, according to the same bank – should further support oil prices. crude and reduce pressure from dollar strength or reduced demand.
Note that the dollar yesterday reached a high not seen in two years, which, according to analysts, makes it more expensive to purchase raw materials, denominated in dollars, as is the case with oil. Economic information on energy consumption and the interest rate outlook from the US Federal Reserve are eagerly awaited this week by investors.
