Oil prices dropped on Friday, January 10, ending the week with increased stability, as tensions between Iran and the U.S. defuse.
Similarly, reports of U.S. rising crude stocks have also helped stabilize prices.
Prices hit three-month highs – reaching nearly $72 per barrel – shortly after Iran launched attacks on two U.S. military bases in Iraq. However, they dwindled amid speculation that Tehran and Washington are choosing to take limited actions.
The tensions caused a price hike
By midweek, tensions in the Middle East rose after Iran launched more than a dozen ballistic missiles against Iraqi bases housing U.S. troops.
It was retaliation after the United States killed Iranian General Qasem Soleimani. The attacks did not hit crude infrastructure, which could have interrupted global supplies.
Oil prices initially increased by over 4% after news of the missile attack broke. However, they subsequently dropped by nearly 5% when U.S. President Donald Trump said that Washington would move to impose sanctions against Tehran instead of launching another attack, as some investors feared.
Shortly after the White House’s statement, U.S. stocks went up and prices declined. This helped ease the volatility that hit the market since the reports of the Iranian attacks over Soleimani’s death.
Nonetheless, the situation remains volatile and the probability of further attacks against tankers or oil facilities in the region continues.
— Dan Scavino Jr.🇺🇸 (@Scavino45) January 8, 2020
Oil prices went down on January 10, when the threat of war in the Middle East assuaged and investors focused on the rise of U.S. stocks and other signs of ample supply.
Currently, prices are under the level recorded before a U.S. unmanned drone killed General Qasem Soleimani on January 3. Iran responded with a missile attack on Iraqi bases housing U.S. troops this week. The action caused no casualties.
Brent crude fell by 20 cents to $65.17 per barrel early on Friday. The European benchmark is nearing its first weekly decline in a month and a half (-5%). Meanwhile, West Texas Intermediate (WTI) went down by 25 cents, standing at $59.31.
— EIA (@EIAgov) January 7, 2020
Oil market stabilized on January 10
With tensions decreasing in the Middle East, the market focused on areas beyond the conflict, such as oil stocks.
U.S. crude stocks rose by 1.2 million barrels last week, the country’s Energy Information Administration (EIA) said on Wednesday.
The effect of the OPEC+ deal remains to be seen, after these nations announced new production cuts staring January 1, 2020.
Another focus for investors is the signing of the “first phase” of the U.S-China trade agreement. In addition to being the world’s largest economies, these two countries are also the main crude consumers. Hence, their long trade war has had an impact on the oil market.
Also, met with @USTradeRep Robert Lighthizer to discuss Phase One of the trade agrmt w/ China. Includes commitment by China to purchase $40 billion annually in agricultural products from the U.S. over the next two years and addresses much of China’s misbehavior on trade. pic.twitter.com/VuUmESWTji
— Senator Jerry Moran (@JerryMoran) January 9, 2020
Oil stocks prove to be sufficient
On the other hand, the International Energy Agency said on Friday that the global oil market is well supplied, with around one million barrels per day of excess supply. This will help control prices.
The IEA executive director Faith Birol assured that prices had temporarily increased due to geopolitical factors. But had since fallen.
However, Birol clarified that the IEA does not make price forecast, but “in the absence of a major unexpected geopolitical event, looking at supply and demand of oil, we do not see any reason for prices to increase substantially in the next months to come as the markets are very well supplied.”
The official added that the IEA hopes that U.S. shale oil production continues to increase, but at a slower pace than in the recent past.
|Mercado Petrolero 10 de enero|
|lunes, 06 de enero de 2020||$ 68,91||$ 63,27|
|martes, 07 de enero de 2020||$ 68,27||$ 62,70|
|miércoles, 08 de enero de 2020||$ 65,44||$ 59,61|
|jueves, 09 de enero de 2020||$ 65,37||$ 59,56|
|viernes, 10 de enero de 2020||$ 65,19||$ 59,07|
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