Oil Prices Steady, Geopolitics vs. Oversupply in Focus
Oil prices held steady on Tuesday, with Brent crude holding around $62 per barrel and West Texas Intermediate (WTI) remaining above $58. Despite concerns about a global oversupply caused by increased OPEC+ production, geopolitical turmoil from countries like Venezuela, Russia, and Iran provided support for prices. Venezuela, facing a partial US blockade, began shutting its oil wells in the region with the world's largest reserves, causing local storage to fill up.
At the same time, US President Donald Trump revealed that the US had attacked facilities in Venezuela as part of its efforts to combat drug trafficking. Meanwhile, Russia-Ukraine tensions escalated again after Russian President Vladimir Putin revealed that his country would revise its position in peace talks following an alleged drone attack on his residence. Trump also threatened to attack Iran if it continued its nuclear program.
However, despite the geopolitical tensions, oil is still expected to see a sharp annual decline due to concerns that global production will outstrip demand. OPEC+ has been increasing production to regain market share, leading to a global oversupply. The volume of oil stored on tankers that has been idle for more than seven days surged 15% last week, approaching its peak recorded in November 2020.
Gao Jian, an analyst at Qisheng Futures Co., said that while the market oversupply issue has been widely discussed, geopolitical turmoil has diverted market attention. "Unless this dispute is resolved, volatility and price support will persist," he said. However, he added that the overall market trend is likely to shift lower due to the deepening oversupply.
In the US, government data showed that oil stocks at the Cushing, Oklahoma, storage hub saw their largest weekly increase since October, indicating a rise in domestic supply. This occurred despite the data release being delayed due to the Christmas holiday.
Key Points:
- Oil prices are stable, with Brent at $62 and WTI above $58.
- Geopolitical turmoil in Venezuela, Russia, and Iran is supporting prices.
- Oversupply from OPEC+ and increased production are adding to market concerns.
- Geopolitical tensions could add to oil price volatility despite the supply surplus.
- US oil stocks showed their biggest increase since October, exacerbating concerns about oversupply. (asd)
Source: Newsmaker.id
