Oil Down As Traders Seek Clarity On Market Conditions

Meanwhile, the U.S. reports a record-breaking mergers and acquisitions year: File Image/Pixabay

Rising crude output in Libya and Norway were enough for traders to reconsider their earlier concerns about global tightness, and accordingly oil prices on Tuesday dipped.

Brent settled down 51 cents to $79.55 per barrel, while West Texas Intermediate settled down 39 cents to $74.37.

According to the Norwegian Offshore Directorate, Norway's crude output increased rose to 1.85 million barrels per day (bpd) in December, compared to expectations of a 1.81 million bpd build; this came on the heels of news that full production resumed at Libya's Sharara oilfield, which can pump 300,000 bpd.

These disclosures were offset by at least 20 percent of North Dakota's crude output remaining shut due to cold winter weather, as well as the American Petroleum Institute on Tuesday stating that other shutdowns due to freezing conditions could deplete U.S. inventories.

In short, oil trading remained rudderless and mired in uncertainty; Bob Yawger, director of energy futures at Mizuho, added, "You've got the geopolitical pressures that aren't enough to really rally the oil market, but they're enough to keep the market from bottoming out of the range."

Fawad Razaqzada, market analyst at Forex.com, offered a more positive bird's eye view of the oil market by stating, "The risks to global supplies driven by tensions and violence in the Middle East continue to provide support for oil on the dips, but we have also been in a positive risk environment, with three major U.S. indices all breaking to fresh unchartered territories this week as the tech-fuelled rally continues.

"The positive risk sentiment from equity markets has also been helping to boost the appetite for other risk assets, including crude oil."

Also on Tuesday and presumably fodder for the bulls, China was reportedly considering a $278 billion rescue package to boost its stock market, and Phil Flynn, senior market analyst at Price Futures Group Inc., noted that if enacted this would boost oil demand expectations.

In other oil news on Tuesday, an Enverus Intelligence Research report revealed that the U.S. enjoyed its biggest ever quarter for mergers and acquisitions, to the tune of $144 billion, in 2023's fourth quarter; this also contributed to an all-time yearly high of over $190 billion in M&A deals.