Oil prices jumped Tuesday after the EIA projected zero US output growth this year, while Hamas responded positively to the truce proposal.
The US West Texas Intermediate (WTI) petroleum futures for March delivery advanced 0.89% to $73.43 per barrel on February 06. Moreover, analysts project a 0.23% climb to $73.48 a barrel in the coming market session.
In its Short-Term Energy Outlook (STEO), the Energy Information Administration (EIA) saw US oil yield remain the same this year. Primarily, it highlighted the deterioration to 12.60 million barrels per day (bpd) in January due to the cold snap.
Nevertheless, the agency expects output to return to just below last year’s average of 13.30 million bpd. It expects a slight decline through the middle of the year, followed by a sharp recovery in the final quarter.
As a result, US oil production will average to mirror 2023 levels, pointing to zero growth. Furthermore, the EIA lowered its US petrol demand forecast by 0.29% from 20.45 million bpd to 20.39 million bpd.
In addition, the American Petroleum Institute (API) reported a build of 0.67 million barrels in crude oil inventories for the week ending February 02. It fell below the anticipated accumulation of 2.13 million barrels but stood far from the previous week’s 2.50 million draw.
Hamas Response to Cease-fire Pressures Oil Prices
Expectations of a potential end to hostilities in Gaza limited the rise in oil prices caused by the US retaliatory strikes. Negotiators expressed optimism after Hamas released an official statement on Tuesday emphasizing their positive approach to the armistice proposal.
However, the militant group that has reigned over Gaza since 2007 reiterated its demand for a comprehensive and complete end to hostilities. In contrast, Israel insists on a temporary truce in exchange for the release of all remaining hostages.
Qatar Prime Minister Sheikh Mohammed bin Abdulrahman Al Thani stated that the ball is now in Israel’s court. Al Thani, who serves as the lead mediator, added that he will meet with Israeli leaders on Wednesday to communicate Hamas’ demands.
Lastly, geopolitical experts claim that an end to the Israel-Hamas war will likely resolve the Red Sea Crisis. Houthi attacks on commercial vessels in the Red Sea have greatly supported oil prices since October last year.
