Oil Rises Signaling Stronger Underlying Physical Market
by Bloomberg | Julia Fanzeres and Alex Longley
click here to read this article at Rigzone.com
*this article was not written by Roseland Oil & Gas
Key oil-market gauges are signaling that crude’s rebound from its biggest drop in more than a month is reflecting a stronger underlying physical market, bolstering futures’ attempt to break out of their recent trading range.
The US benchmark’s prompt spread, a critical barometer for supply and demand, briefly flipped to a bullish structure known as backwardation for the first time since November. In the options market, some traders are betting that the worst of oil’s early-year malaise may be over, with contracts that would profit from a rally above $110 in June futures changing hands in large volumes.
Despite choppy moves in recent days, crude futures have been stuck in a roughly $5 range since the start of December. West Texas Intermediate advanced 2.1% to settle above $72 a barrel on Tuesday, reversing a tumble the previous day that was kicked off by Saudi Arabia trimming its official selling prices. Underpinning the rebound are continued attacks on merchant shipping in the Red Sea and shutdowns of major oil fields in Libya. Crude prices have also tracked the trajectory of equity markets as they pared their losses for the day.
Meanwhile, the US expects global oil demand will exceed supply by 120,000 barrels a day in 2024 as output cuts by OPEC+ tighten the market. That modest supply deficit could push Brent futures to average $85 a barrel in March, up from $78 last month, the Energy Information Administration said in its monthly market forecast.
Prices:
- WTI for February delivery climbed 2.1% to settle at $72.24 a barrel in New York.
- Brent for March settlement rose 1.9% settle at $77.59 a barrel.
Recent days have also seen a surge in oil-tanker rates as one Asian shipper sparked a frenzy by hiring a slew of vessels. The move has tightened the availability of the world’s largest tankers and led to the biggest one-day gain in the cost of hauling oil from the US to China since November 2022. High freight rates can sometimes make it difficult to send cargoes over long distances.
by Bloomberg | Julia Fanzeres and Alex Longley
click here to read this article at Rigzone.com
*this article was not written by Roseland Oil & Gas