Oil Edges Higher as Tighter Supplies Vie With Demand Concerns

image is BloomburgMedia_S96FNJT1UM0W00_21-02-2024_05-00-12_638440704000000000.jpg

An oil drilling rig in Midland, Texas, US, on Thursday, March 2, 2023. Thousands of miles away from the turmoil on Wall Street, Midland, Texas that ranked No.1 in the US for inflation just over a year ago has since ceded that title – only to lay claim to a different one: the country’s pay-raise capital. Photographer: Sergio Flores/Bloomberg

Oil edged higher, buoyed by an upswing in Chinese equities and a weaker dollar, as investors juggled signs of tighter supplies with elevated tensions in the Middle East and a still-shaky demand outlook.

Brent rose toward $83 a barrel after falling 1.5% on Tuesday, while West Texas Intermediate traded above $77. OPEC+ producer Russia met its target for export cuts in January, complying with an earlier pledge to the group, according to government data. Chinese figures showed that while trips increased over the Lunar New Year holidays, tourists spent frugally.


Crude has remained in a $10-a-barrel trading range this year as the push and pull of bearish and bullish factors led to a decline in volatility. Attacks on ships in the Red Sea and the Israel-Hamas war have ramped up tensions in the Middle East and added a geopolitical risk premium to prices.

Chinese shares rose after policymakers took steps to boost investor confidence, although stocks elsewhere in Asia fell. A weaker dollar — which was down for a third session — makes commodities more attractive for overseas buyers.

“Prices remain in a tight consolidation range, reflecting some near-term indecision,” said Yeap Jun Rong, a market strategist for IG Asia Pte in Singapore. Investors are “wondering what’s next in terms of the broader supply-demand dynamics,” he added.

Still, the prompt timespread for Brent has expanded in backwardation since December, signaling tightening supply. The spread was at 82 cents a barrel on Wednesday, compared with 29 cents at the start of the month.

©2024 Bloomberg L.P.

By Yongchang Chin


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