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Prices drew support from the closure of Libya's 300,000 barrels
per day (bpd) Sharara oilfield, one of its largest, which has
been a frequent target for local and broader political protests,
and Middle East tensions.
The Israeli military has said its fight against Hamas will
continue through 2024, stoking concerns the conflict could
escalate into a regional crisis that disrupts oil supplies.
Meanwhile, some major shipping companies are still avoiding the
Red Sea following attacks by Iran-aligned Houthi militants in
response to Israel's war against Hamas. However, the impact on
oil tanker movements has been less than expected, according to a
Reuters analysis.
"The more attractive alternative for (oil tankers) right now is
to make a dash for the United States, where crude oil is cheaper
than Brent," said Bob Yawger, director of energy futures at
Mizuho.
Brent and WTI posted 3% and 4% losses respectively on Monday
after sharp cuts to Saudi Arabia's official selling prices (OSP),
prompting both supply and demand concerns.
Oil futures also were also supported on Tuesday after Saudi
Arabia emphasized its desire to support efforts to stabilize oil
markets and following reports that Russia curbed its crude oil
production level in December, said Price Futures Group analyst
Phil Flynn.
"It's an early sign of compliance by Russia," he said.
Russia is part of the OPEC+ group of oil producers that has
agreed to cut production by around 2.2 million bpd.
In the U.S., crude production will hit record highs over the
next two years but grow at a slower rate, the Energy Information
Administration (EIA) said, as efficiency gains offset a decline
in rig activity. Output will rise by 290,000 bpd to a record
13.21 million bpd this year.
Crude stocks fell by 5.2 million barrels in the week ended Jan.
5, according to market sources citing American Petroleum
Institute figures on Tuesday.[API/S]
Government data on stockpiles is due Wednesday. [EIA/S]
Core U.S. inflation data on Thursday will also be in the
spotlight.
(Reporting by Nicole Jao in New York, Robert Harvey in London,
Arathy Somasekhar in Houston and Emily Chow in Singapore;
editing by David Goodman, Marguerita Choy and Jonathan Oatis)
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