Oil "Waddles" Upward As Geopolitical Tensions Cause Mild Concerns

Meanwhile, Russia makes good on its pledge to cut supplies: File Image/Pixabay

Oil prices on Friday again crawled their way upward with bearish demand forecasts buffering stronger worries about geopolitical tensions, and the commodity also notching a second consecutive weekly gain.

Brent settled up 61 cents at $83.47 per barrel, while West Texas Intermediate settled up $1.16 at $79.19; the April contract rose 87 cents to $78.46.

For the week, Brent gained more than 1 percent and WTI gained about 3 percent.

Manish Raj, managing director at Velandera Energy Partners, said, "Oil is just waddling up since nobody wants to be short into the weekend when the tailwinds favour oil prices."

The latest from the Middle East was Hezbollah firing dozens of rockets at a northern Israeli town in a "preliminary response" to 10 civilians killed in southern Lebanon, and a missile fired from Yemen striking an India-bound oil tanker.

Still, the concern generated by these events was mild, and Giovanni Staunovo, an analyst at UBS, remarked, "The market sees oil still flowing and disruptions have been small."

More troubling was the International Energy Agency earlier this week downgrading its 2024 growth forecast to 1.22 million barrels per day (bpd) from 1.24 million bpd, and stating that, "The expansive post-pandemic growth phase in global oil demand has largely run its course."

But the outlook for crude remains mixed: the Organization of the Petroleum Exporting Countries (OPEC) predicted robust consumption for 2024 and is implementing output cuts to buttress prices.

Fawad Razaqzada, a market analyst at City Index, said in a note to clients, "All told, I think risks are skewed to the upside for oil, as there not many negative influences to impact prices."

In other oil news on Friday, Bloomberg's calculations of official data suggested that Russia approached its target for voluntary supply reductions for the first time since promising to do so in 2023.

Also, a Patriotic Union of Kurdistan leader said on Friday that no dates have been set on the resumption of oil exports to Turkey from Iraq's semi-autonomous Kurdistan region; the pipeline between the two countries has been dry since March 2023 due to a squabble between Iraq, Turkey, and the Kurdistan Regional Government.