December West Texas Intermediate (WTI) crude oil futures experienced a volatile week, with prices swaying due to geopolitical tensions and shifts in supply and demand metrics.
The market started the week strong, driven by concerns of supply disruptions following the terrorist attacks by Hamas on Israel. However, the bullish sentiment quickly faded.
Israel-Hamas Conflict and Oil Supply
Initially, oil prices surged to a weekly high of $85.56 due to fears that the escalating conflict between Israel and the Palestinian Islamist group Hamas could morph into a broader crisis, affecting global oil supplies. But this concern was short-lived. After Saudi Arabia intervened, promising to work with international partners to stabilize the oil market, prices took a downturn.
IEA and EIA Reports Add Uncertainty
On the supply front, contrasting reports from the International Energy Agency (IEA) and the U.S. Energy Information Administration (EIA) left traders in a quandary. The IEA lowered its oil demand growth forecast for 2024, citing harsher global economic conditions and advancements in energy efficiency. The EIA, however, reported that global oil inventories would decrease due to voluntary output cuts from Saudi Arabia and altered production targets among OPEC+ countries.
OPEC’s Role
Adding to the complexities of the market, OPEC and Russia reaffirmed their commitment to coordination for oil market predictability.