Oil futures fell on Tuesday, weighed down by a strong US dollar, but ongoing tensions in the Middle East that have disrupted tanker traffic and threatened oil supplies in the region kept price losses under control.
Price movement
-
WTI CL00
-1.13% every.1,
-1.13% clg 24,
-1.13%
Futures for February delivery fell 32 cents, or 0.4%, to $72.36 a barrel on the New York Mercantile Exchange. WTI futures were not settled on Nymex on Monday due to the Martin Luther King Jr. Day holiday. -
Brent crude for March BRN00,
-0.51% BRNH24,
-0.51% ,
The global index fell 8 cents, or 0.1%, to $78.07 a barrel on the ICE Futures Europe exchange, after falling 0.2% on Monday. -
February Gasoline RBG24,
+0.47%
It added 1.2% to $2.1459 a gallon, while the February HOG24 heating oil price rose,
+0.53%
It rose 1.2% to $2.7003 per gallon. -
Natural gas for February delivery NGG24,
-10.44%
It traded at $2.921 per mmBtu, down 11.8%.
Market driving factors
The weakness in oil prices on Tuesday is likely to be “short-lived, as the situation in the Red Sea looks quite unstable,” Tariq Dhaher, managing director at Tyche Capital Advisors, told MarketWatch. He added that currently, the US dollar is contributing to the weakness of oil prices.
The ICE US Dollar Index DXY rose 0.9% to 103.288 in Tuesday trading. A stronger dollar could make oil priced in dollars more expensive for foreign buyers.
US inflation numbers and escalating military actions in the Red Sea appear to have contributed to “reshaping market expectations of the interest rate path on both sides of the Atlantic,” Samer Hassan, a market analyst at XS.com, said in an email comment. . “This in turn was reflected in further rises in Treasury yields since last Friday and restored some strength to the US dollar.”
Meanwhile, the Iran-backed Houthis operating from Yemen on Monday vowed to continue attacking US and international targets in the Red Sea in response to Israeli operations in Gaza, news reports said. The US Central Command said that a Houthi missile hit the US bulk carrier “Gibraltar Eagle” on Monday without causing injuries or major damage.
Oil futures rose on Friday in the wake of the attack by US and British forces on Houthi militants, but closed at their highest levels in the session and suffered weekly losses. Meanwhile, data shows that tanker traffic through the Red Sea and the Bab al-Mandab waterway, a crucial checkpoint, has declined significantly.
Oil has found some support due to incidents in the Red Sea and near the Strait of Hormuz, but has struggled to build a geopolitical risk premium since the war between Israel and Hamas began in October. The shipping problems are seen as a boost to US crude exports.
is reading:Why chaos in the Red Sea is pushing oil buyers 'into the arms of US shale producers'
“For commodity markets, increased tension poses supply risks, with energy markets most vulnerable. For oil and LNG, we see no fundamental impact on supplies,” Ewa Manthey and Warren Patterson, analysts at ING, said in a note. Until now”.
“Refiners and consumers may initially face some distress as supply chains adjust to the longer path. Given the uncertainty and spillover risks, oil prices are likely to remain relatively well supported. “In order to see oil prices rise significantly, we will need to see more Escalation and/or significant loss of oil supplies.”
In the United States, natural gas prices fell sharply even as winter weather swept through many parts of the United States
The natural gas market has seen some profit-taking, but Tyche Capital Advisors' Zahir said he sees a “buying opportunity.”
“If we see more of the recent freeze that the country experienced in the coming weeks, we could see supplies decline fairly quickly,” he told MarketWatch. It will definitely be weather-related in the coming weeks and “will be volatile.”
