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Oil Price Fundamental Daily Forecast – Boosted by Supply Worries, Steady Demand Outlook

By:
James Hyerczyk
Published: Jan 6, 2022, 13:03 UTC

The move by the Saudi’s to lower prices to Asia is being viewed as an attempt to increase demand in the region.

WTI and Brent Crude Oil

In this article:

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading higher on Thursday after shrugging off earlier weakness. The markets were pressured on the opening by demand concerns after the U.S. Dollar rose in reaction to hawkish Federal Reserve news. However, several events overnight fueled a turnaround, putting the markets in a position to challenge their October contract highs.

At 12:17 GMT, March WTI crude oil is trading $78.24, up $0.77 or +0.99% and March Brent crude oil is at $81.66, up $0.86 or +1.06%. On Wednesday, the United States Oil Fund settled at $55.43, down $0.16 or -0.29%.

Crude Oil Extends Rally on Supply Concerns Over Kazakhstan Unrest, Libyan Outages

WTI and Brent crude oil futures jumped on Thursday, extending yesterday’s rally, on escalating unrest in OPEC+ oil producer Kazakhstan and supply outages in Libya.

According to CNBC, Russia sent paratroopers into OPEC+ oil producer Kazakhstan on Thursday to help quell a countrywide uprising after deadly violence spread across the tightly controlled former Soviet state.

“The political situation in Kazakhstan is becoming increasingly tense,” Commerzbank said. “And this is a country that is currently producing 1.6 million barrels of oil per day.”

There were no indications that oil production has been affected so far, but the price action suggests speculative buyers are taking no chances.

In other news, Libyan oil output is down by over 500,000 barrels per day due to pipeline maintenance and oil field shutdowns.

Saudi Arabia Makes Deep Cuts to Crude Oil Prices for Asia ~Reuters

The world’s top oil exporter, Saudi Arabia, has cut the official selling price (OSP) for all grades of crude it is selling to Asia in February by at least $1 a barrel, three sources with knowledge of the matter said on Thursday.

The deep price cuts come on the back of rising supplies as the Organization of Petroleum Exporting Countries (OPEC) and its allies, together known as OPEC+, decided this week to add another 400,000 barrels per day (bpd) of supply in February, as it has done each month since August.

Daily Forecast

It was just a couple of weeks ago that crude oil investors were worried about demand due to the Omicron outbreak, but those concerns are now being overtaken by issues with supply.

Meanwhile, demand is now expected to remain steady-to-higher as Omicron worries dissipate. Additionally, the move by the Saudi’s to lower prices to Asia is being viewed as an attempt to increase demand in the region.

Earlier in the week, OPEC+ voted to increase production in February, which also serves as a vote of confidence that demand will continue to improve as the global economy recovers from the pandemic.

For a look at all of today’s economic events, check out our economic calendar.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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