Oil little changed amid Middle East tensions

by Jonathan Adams
Oil hits

Brent crude futures slid 1 cent to $81.62 a barrel, while U.S. WTI crude futures gained 3 cents to $76.25 a barrel

Oil prices were little changed on Friday, staying on track for weekly gains, with tensions persisting in the Middle East.

Brent crude futures slid 1 cent to $81.62 a barrel by 0334 GMT, while U.S. West Texas Intermediate (WTI) crude futures gained 3 cents to $76.25 a barrel.

Both benchmarks gained nearly 3% in the earlier session amid growing tensions in the Middle East.

The tensions have kept oil prices elevated, with Brent and WTI both set to rise over 5% for the week.

The move yesterday appeared a bit excessive on the back of not very much at least in terms of fundamentals, according to ING’s head of commodities research Warren Patterson.

I still expect the rangebound trading that we have become accustomed to recently will continue given the comfortable oil balance, he added.

While the conflict has propped up prices, there has been no impact on oil production.

Non-OPEC output from Norway and Guyana is increasing while Russia is exporting more crude in February than it planned after a combination of attacks and technical outages at its refineries that could undermine its pledge to curb sales under an OPEC+ pact.

Under the deal with OPEC+, Russia committed to capping crude output at 9.5 million bpd. It is also voluntarily cutting crude exports by 300,000 bpd and fuel exports by 200,000 bpd from the average May-June level.

Deflation risks in China, the world’s top crude oil importer, are also weighing on global oil prices, according to IG analyst Tony Sycamore.

I think the lower crude oil price in Asia is largely because of early weakness in China’s equity markets and the fallout from yesterday’s shocking consumer price index figure in China which has served to further undermine confidence ahead of the Lunar New Year celebrations, he said.

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