Brent crude futures closed with a gain of 61 cents, or 0.74%, at $83.47 per barrel. Approaching its expiry on Tuesday, the nearby March contract for US West Texas Intermediate crude settled higher at $79.19, representing a $1.16 increase or a 1.49% rise.
In the prior session, oil prices closed higher due to escalating geopolitical tensions in the Middle East, which outweighed a forecast of slowing demand from the International Energy Agency (IEA). The increasing threat of a broader Middle East conflict bolstered crude prices.
Brent crude futures closed up 61 cents, or 0.74%, at $83.47 per barrel. West Texas Intermediate crude oil from the US closed at $79.19, marking a $1.16 increase or a 1.49% rise, as the March contract neared its expiration on Tuesday.
The April contract increased by 87 cents to $78.46. Over the week, Brent saw a gain of over one percent, while the US benchmark rose approximately three percent.
In India, on the Multi Commodity Exchange (MCX), crude oil futures set to expire on March 19 closed slightly higher at ₹6,484 per barrel, after fluctuating between ₹6,381 and ₹6,518 per barrel during the session. This compares to the previous closing price of ₹6,482 per barrel.
What Is Influencing the Price of Oil?
Hezbollah announced on Thursday that it launched numerous rockets towards a northern Israeli town as a “preliminary response” to the deaths of 10 civilians in southern Lebanon, marking the deadliest day for Lebanese civilians in four months of cross-border tensions. Analysts noted a moderate response from the oil market to the developments in the Middle East.
In January, US producer prices rose more than anticipated, driven by significant increases in service costs, potentially heightening concerns about inflation. However, a decline in retail sales raised hopes that the Federal Reserve would soon initiate interest rate cuts, potentially bolstering oil demand.
According to the IEA, global oil demand growth is losing momentum, leading to a reduction in its 2024 growth forecast. The agency now anticipates global oil demand growth to slow to 1.22 million barrels per day (bpd) in 2024, approximately half of the growth recorded last year, partly attributed to a significant decrease in Chinese consumption. Previously, the IEA had projected 2024 demand growth of 1.24 million bpd.
On Tuesday, the Organization of the Petroleum Exporting Countries (OPEC) maintained its projection for robust growth in global oil demand in 2024 and 2025 and revised its economic growth forecasts upward for both years, citing additional potential for growth. OPEC anticipates continued increases in oil consumption over the next twenty years.
In its monthly report, OPEC stated that global oil demand is projected to increase by 2.25 million barrels per day (bpd) in 2024 and by 1.85 million bpd in 2025, with both forecasts remaining unchanged from the previous month. The potential for increased economic growth could further bolster oil demand.
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