Confusing Market Signals Cause Oil Prices To Dip

But Bloomberg believes a robust outlook has been overlooked: File Image/Pixabay

Range bound oil trading persisted on Tuesday with no clear analytical view of the market's current status or where it was heading, leaving investors with their familiar worries about geopolitical tensions and demand.

Brent fell 90 cents to $82.70 per barrel by 1820 GMT, and West Texas Intermediate for April delivery fell $1.03 to $77.43 per barrel.

News affecting trading included various countries headed by the U.S. increasing their efforts to secure a ceasefire between Israel and Hamas; and Iran-aligned Houthis increasing their attacks in the Red Sea and Bab al-Mandab Strait (four vessels have been hit by drone and missile strikes since Friday).

These events were capped by an earlier International Energy Agency report revising its 2024 oil demand growth forecast downward, thus exacerbating the deluge of bullish and bearish data that has rendered oil trading rudderless these past few weeks.

Still, Bloomberg pointed out that "the price difference between monthly contracts has been widening, indicating a more robust outlook in parts of the physical market."

Rob Thummel, senior portfolio manager at Tortoise Capital Advisors, said, "The market is in a bit of a wait-and-see mode for now; the next thing traders are looking out for is what OPEC+ decides to do at their next output policy meeting."

Thummel was referring to the Organization of the Petroleum Exporting Countries expected to decide in early March whether to extend output cuts into the second quarter.

For the record, media reported that Russia has complied in January with its pledge to OPEC to reduce crude exports by 300,000 barrels per day (bpd) this quarter: it exported 4.59 million bpd both via tankers and pipelines last month, a decline equal to around 307,000 bpd.