Oil Slips, Kazakhstan Supply Rebounds
Oil prices fell on Tuesday (January 27th) as the market refocused on the prospect of tighter supply, particularly from Kazakhstan. Although a winter storm in the US disrupted production and refineries, supply-side pressures kept prices weak.
In the market, Brent fell to around $65.15/barrel and WTI weakened to around $60.28/barrel. The declines came after the previous session also closed lower.
The key story is in Kazakhstan. The local government stated its readiness to resume production from its largest field, while a major export pipeline operator (CPC) announced its Black Sea terminal was returning to full capacity after maintenance. This means supply for the "prompt" market could potentially be more relaxed.
However, a cold storm in the US prevented further declines. Freezing weather disrupted several Gulf Coast refineries, and some significant US oil production was lost over the weekend—keeping the market still assessing the risk of short-term supply disruptions.
On the geopolitical front, tensions have not subsided. A US aircraft carrier strike group has reportedly arrived in the Middle East, expanding the US's ability to protect troops or potentially increasing pressure on Iran. This leaves a "risk premium" that sometimes prevents prices from falling too far.
Meanwhile, OPEC+ is scheduled to meet on February 1, and eight key members are said to be leaning towards maintaining a pause in production increases for March. This means that price direction remains a tug-of-war: Kazakh supply improves, the US hurricane holds back, and geopolitics plays a role.
Key point (5):
Oil falls as the market anticipates Kazakhstani supply recovering.
CPC returns to full capacity, increasing confidence in smooth supply.
The US hurricane disrupted production and refineries, but the effects are considered temporary.
Geopolitics (Middle East/Iran) still leaves a risk premium.
OPEC+ has the potential to maintain a production increase for March.
Source: Newsmaker.id
