WTI treads water near $72.70 after recent gains on optimistic OPEC’s monthly report

• WTI price received upward support from a positive OPEC report.
• OPEC forecasted oil demand to grow by 2.25 and 1.85 million bpd in 2024 and 2025, respectively.
• US announced to re-designate the Houthis on its list of “specially designated global terrorists”.

West Texas Intermediate (WTI) price hovers around $72.70 per barrel during the Asian session on Thursday. Crude oil prices experienced an upward trend, supported by the optimism generated by the Organization of the Petroleum Exporting Countries (OPEC). According to OPEC’s monthly report, there is an expectation of robust growth in oil demand for 2024 and 2025. The report forecasts a growth of 2.25 million barrels per day (bpd) in 2024, consistent with the predictions made in December, and anticipates a growth of 1.85 million bpd in 2025.

From a geopolitical perspective, the persistent supply disruption in the Red Sea is serving as a deterrent to a more substantial decline in crude oil prices. The attacks on ships in the Red Sea, orchestrated by Iran-led Houthi forces, have prompted many companies to redirect their cargoes around Africa, resulting in heightened journey times and increased costs. In response to these attacks on shipping, the United States conducted another round of strikes against Houthi targets in Yemen on Wednesday.

Additionally, on Wednesday evening, Yemen’s Houthi rebels reportedly targeted a US-owned cargo ship with a kamikaze drone in the Red Sea. This incident occurred after the United States announced its intention to re-designate the Houthis on its list of “specially designated global terrorists,” as reported by the BBC. The new designation by Washington would require US financial institutions to freeze Houthi funds, and members of the group would be prohibited from entering the United States.

The American Petroleum Institute (API) reported a surprising increase in Weekly Crude Oil Stock to 0.483 million barrels for the week ending on January 12, contrary to the expected decline of 2.4 million barrels. The previous reading had indicated a decline of 5.215 million barrels in crude oil stock. The Energy Information Administration (EIA) is set to release the Crude Oil Stocks Change report later in the North American session. Market expectations are for a decline of 0.313 million barrels, reversing the previous stock figure of 1.338 million barrels.