Oil futures continued their upward trend on Wednesday, marking a third consecutive increase. The global benchmark climbed back above the $80 per barrel mark as traders closely monitored tensions in the Red Sea, which have led to disruptions in global trade.
Price Action
- West Texas Intermediate crude for February delivery rose by 84 cents, or 1.1%, reaching $74.78 a barrel on the New York Mercantile Exchange.
- February Brent crude, the global benchmark, went up 90 cents, or 1.1%, to $80.13 a barrel on ICE Futures Europe.
Market Drivers
According to Marios Hadjikyriacos, a senior investment analyst at XM, oil prices are being supported by missile attacks on commercial ships in the Red Sea, which pose a threat to global trade routes. However, he expressed doubts about the longevity of such concerns in light of slowing demand in the coming year and record-high crude production in the United States.
Several shipping companies have decided to suspend shipments through the Red Sea in response to a series of drone and missile attacks carried out by Iran-backed Houthi rebels since the start of the Israel-Hamas war. In response to these attacks, the U.S. has announced the initiation of an international naval effort to counter them.
The American Petroleum Institute reported late Tuesday that U.S. crude inventories increased by 939,000 barrels last week, according to a reliable source.
Official data from the Energy Information Administration is expected to be released on Wednesday morning. Analysts surveyed by The Wall Street Journal predict that crude inventories will rise by 2.5 million barrels on average, while stocks of gasoline and distillates are each expected to increase by 700,000 barrels.
These developments leave uncertainty regarding whether oil prices will reach $100 per barrel again by 2024.
The Year Ahead: Why oil may not see a return to $100 a barrel in 2024
