Global oil prices dropped on Tuesday, January 7, extending a two day decline after last week’s rally. Analysts linked the dip to weakening optimism about global demand despite ongoing concerns over reduced oil supplies from Russia and Iran, exacerbated by Western sanctions.
According to Reuters, Brent crude futures fell by $0.08 (0.1%) to $76.22 per barrel, while U.S. West Texas Intermediate (WTI) crude dropped by $0.15 (0.19%) to $73.42 per barrel. The declines followed Monday’s losses, which came after five consecutive days of price increases last week.
Last week’s rally, the strongest since October, was fueled by expectations of increased fiscal stimulus to boost China’s economy. However, softer economic data from major economies, including the U.S. and Germany, dampened market optimism.
| Key Oil Price Movements | Price (USD) | Change (%) |
|---|---|---|
| Brent Crude | 76.22 | -0.1% |
| West Texas Intermediate (WTI) | 73.42 | -0.19% |
Priyanka Sachdeva, a senior market analyst at Phillip Nova, noted that this week’s oil price weakness is partly due to a technical correction, as traders react to softer global economic data. She pointed to slower-than-expected growth signals from China and rising non-OPEC oil supplies as factors that could ease market tightness in 2024.
Market participants are now closely watching U.S. labor data due on Friday, including the non-farm payroll report for December, to gauge how interest rate policies might affect oil demand.
Despite these concerns, sanctions on Russian and Iranian oil exports have raised uncertainties. These geopolitical risks are driving increased demand for Middle Eastern oil, prompting Saudi Arabia to raise February oil prices for Asian markets. This marks the first price hike in three months.
Additionally, the U.S. Commodity Futures Trading Commission reported that financial managers increased net long positions on U.S. oil futures and options during the week ending December 31, signaling confidence in oil’s long-term prospects.
While demand worries weigh on prices, supply risks and geopolitical uncertainties remain critical factors influencing the global oil market.
