Oil futures finished lower Tuesday, pulling back from the nearly one-month high they settled at a day earlier, as Libya recently restarted production at its largest oil field.
Traders continued to monitor ongoing tensions in the Middle East and weather-related oil production disruptions in North Dakota.
Price moves
-
West Texas Intermediate crude for March delivery
CL00,
+1.50% CL.1,
+1.50% CLH24,
+1.50%
fell 39 cents, or 0.5%, to settle at $74.37 a barrel on the New York Mercantile Exchange. -
March Brent crude
BRN00,
+1.31% BRNH24,
+1.34% ,
the global benchmark, declined by 51 cents, or 0.6%, to settle at $79.55 a barrel on ICE Futures Europe. -
February gasoline
RBG24,
+1.14%
lost 1.2% to $2.21 a gallon, while February heating oil
HOG24,
+2.26%
shed nearly 0.1% to $2.69 a gallon. -
Natural gas for February delivery
NGG24,
+7.80%
settled at $2.45 per million British thermal units, up 1.3%.
Market drivers
Oil prices ended lower Tuesday, giving up part of Monday’s advance.
The pullback in prices came “in conjunction with no new developments in the Red Sea and the opening of Libya’s largest oil field, said Rania Gule, market analyst at XS.com.
Both Brent and WTI ended Monday at their highest since Dec. 26, lifted by concerns not just around the threat to supply from continued tensions in the Middle East. Ukrainian drone strikes on Russian Baltic ports, from which Russia exports oil, have also been a concern, said Carsten Fritsch, commodity analyst at Commerzbank, in a note.
See: U.S., British launch new round of airstrikes against multiple Houthi sites in Yemen
Oil production in North Dakota has also been curtailed by freezing weather that may take weeks to fully undo, he noted, with production losses last week running as high as 700,000 barrels a day.
Read: Oil traders care more about North Dakota weather than Red Sea missile attacks
“Fundamentally, threats to supply have been elevated for months amid the Israel-Hamas conflict in the Middle East, but worries about fading consumer demand had kept prices subdued near the low end of the 2023 trading range for much of the fourth quarter,” said Tyler Richey, co-editor at Sevens Report Research.
Oil market dynamics started to change over the last week, he told MarketWatch. “The combination of cold weather knocking out a big portion of oil production in North Dakota since late last week, and news of an apparent Ukrainian drone attack on a Russian fuel export that temporarily halted operations at the facility this week, have tipped the fundamental scales in favor of the bulls for the very near term.”
Meanwhile, Libya’s National Oil Co. said on Sunday that it lifted force majeure on the Sharara oil field, the nation’s largest, after a two-week shutdown due to protests. The field produces up to 300,000 barrels a day.
In the U.S., the Energy Information Administration will release weekly data on petroleum supplies on Wednesday.
On average, analysts polled by S&P Global Commodity Insights expect the data to show a decline in domestic commercial crude supplies of 3 million barrels to 427 million barrels, which would be the lowest in nearly three months. They also forecast a weekly inventory gain of 1 million barrels for gasoline, and a modest 81,000-barrel fall for distillate stockpiles.
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