Oil Prices Dip Slightly Amid Geopolitical Slow Sizzle
One day after losing more than four percent, West Texas Intermediate (WTI) and Brent crude oil prices fell again Thursday – but much less dramatically.
The WTI for February shed five cents to end the day at $59.56 per barrel. The light crude marker traded within a range from $58.66 to $60.31.
Also posting a modest loss Thursday was March Brent, which fell seven cents to settle at $65.37 per barrel.
“Oil prices stabilized today as tensions eased in the Middle East,” Anish Kapadia, U.K.-based oil and gas consultant and managing director with Akap Energy Ltd., told Rigzone. “Fundamentally oil is fairly valued with risks balanced.”
Kapadia commented that downside expectations for the oil market include a product inventory build for the first half of 2020, the risk that Saudi Arabia will threaten to increase production and strong non-OPEC output growth outside the U.S. during the first half from Norway, Guyana, Canada and Brazil. However, he also envisions a number of positive factors:
- a higher-than-expected U.S. production slowdown given capex constraints for Lower 48 players
- compliance with OPEC cuts among members
- a slow recovery in demand growth from 2019 lows.
“The Iranian crisis continues its slow sizzle without too much effect on where Brent and WTI are trading globally,” Campbell Faulkner, senior vice president and chief data analyst with the interdealer commodities broker OTC Global Holdings, told Rigzone. “This is likely due to excess supply that was willingly shut in by various OPEC and aligned countries and a persistent unwillingness for either Iran or the U.S. to engage in serious conflict.”
Given apparently less heated rhetoric between the U.S. and Iran and a diminished risk premium, Faulkner remarked that the overall market for crude is relatively elastic – contributing to the slow upward trend since late 2019.
Unlike crude oil, reformulated gasoline (RBOB) settled higher Thursday. February RBOB added less than one cent to close at $1.65 per gallon.
Henry Hub natural gas for February delivery posted a 2.5-cent gain Thursday to settle at $2.17.
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