Oil Prices Rise in Asian Trade
In an exciting turn of events, oil prices in Asian trade on Monday saw an increase, building on last week’s gains of nearly 4 percent. The rise was fueled by the belief that the supply was tightening, with the stakes raised by further attacks on Russian energy infrastructure, as reported by Reuters.
Market Movement
Brent crude oil futures for May delivery rose by 0.4 percent to $85.66 a barrel, while the April contract for US West Texas Intermediate crude was up by 0.5 percent at $81.44. The more active May delivery contract for WTI traded higher at $80.95 per barrel, climbing by 0.5 percent.
Risk Premium
Vandana Hari, founder of oil market analysis provider Vanda Insights, stated that the strikes on Russian refineries added a risk premium of $2-$3 per barrel to crude last week. This risk premium remains intact as more attacks occurred over the weekend, signaling potential price fluctuations.
Global Impact
The attacks on Russian refineries have caused disruptions, idling around 7 percent of Russian refining capacity in the first quarter. This has global implications as the affected refining complexes process and export crude varieties to markets like China and India.
Geopolitical Tensions
In the Middle East, tensions escalated as Israeli Prime Minister Benjamin Netanyahu announced plans to push into Gaza’s Rafah enclave. This move has drawn criticism from allies and raised concerns about regional peace, further complicating an already volatile situation.
Market Outlook
Investors are eagerly awaiting the outcome of the US Federal Reserve’s upcoming meeting, which will provide clarity on the timing of interest rate cuts. Lower interest rates would stimulate demand in the US, the world’s biggest oil consumer, potentially boosting oil prices.
Positive Signs
Despite some fluctuations, both benchmark oil contracts showed gains last week. A bullish demand report from the International Energy Agency, predicting a supply deficit for the first time this year, contributed to the price increase. Additionally, US fuel demand and refinery projects further supported prices.
Overall Trend
As of Friday’s close, Brent and WTI futures have seen significant gains in 2024, with an increase of 11 percent and 13 percent, respectively. The market continues to show promise and potential for growth in the coming weeks.