Oil at its highest for seven weeks

(New York) Oil prices rose to a seven-week high on Thursday following positive economic data in the United States and stimulus measures in China.


The decrease in crude oil stocks in the United States last week and the continuation of geopolitical risks also drove prices.

The price of a barrel of Brent from the North Sea, for delivery in March, rose 2.98% to $82.43, a peak since the end of November.

Same score for its American equivalent, the barrel of West Texas Intermediate (WTI), for delivery the same month, which gained 3.02% to 77.36 dollars, also a high for almost seven weeks.

Several indicators in the United States showed a more robust economy than expected, starting with the growth of the gross domestic product (GDP) of the United States in the last quarter of 2023 which amounted to 3.3% at an annualized rate against 2 % expected.

Then orders for durable goods held up in December and even climbed 0.6% if we exclude the volatile transport sector.

“The growth of American GDP certainly weighs on the rise in prices as well as orders for durable goods which were rather good,” indicated Bill O’Grady of Confluence Investment.

The analyst also emphasizes China’s stimulus measures “which are a factor of increase probably more important than the figure for American gross domestic product”.

The Chinese central bank announced on Wednesday an upcoming reduction in the required reserve ratio of banks, a measure intended to ward off the slowdown in growth in the world’s second largest economy.

In addition to these data likely to strengthen demand for black gold, which is bullish for prices, there are “numerous geopolitical risks”, further underlined Bill O’Grady.

If tensions in the Middle East have not led to supply disruptions for the moment, they “reinforced the bullish sentiment” on the oil market, analysts at Energi Danmark also say.

The war between Israel and Hamas is exacerbating regional tensions, particularly off the coast of Yemen where Houthi rebels, close to Iran, fired missiles against two American ships on Wednesday, forcing them to turn back.

Finally on Wednesday, the American Energy Information Agency (EIA) showed a sharp reduction in commercial stocks in the United States last week (-9.2 million barrels).

This figure, much higher than the 1.4 million barrels forecast by analysts, can be explained in particular by cold weather conditions which led to a reduction in crude production.


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