Oil prices held close to $79 on international markets on Friday, juggling concerns about demand amid a faltering world economy and reduced production in the United States of America (US) due to a cold wave.
In the London market, the price of a barrel was almost unchanged from the previous close, trading at $78.95. Similarly, in the American market, a barrel traded at $73.9, with no significant price changes.
The International Energy Agency (IEA) and the Organization of the Petroleum Exporting Countries (OPEC) support prices with their estimates of solid demand growth this year and next, alongside reduced production in the US due to low temperatures.
In North Dakota, operators have shut down about 40 per cent of oil production, and Libya hasn’t restored its supply yet.
Balancing Growth Estimates and Mid-East Tensions
On Friday, analysts observed that the IEA’s demand growth estimate is half as strong as OPEC’s. They also emphasized the IEA’s assessment that the market should maintain a reasonable supply level this year without major disruptions.
Bjarne Schieldrop from SEB commented, “The forecast for global oil demand growth remains uncertain, with significant variations in estimates from market participants and research institutions.”
Traders are also closely monitoring the escalating tensions in the Middle East. Craig Erlam from OANDA noted, “Oil prices remain sensitive to events in the Middle East. However, the market has maintained its balance as observed in the recent weeks.”
He further added that while supply interruptions pose a risk of raising oil prices, negative risks, such as the state of the world economy, also exist.
On Thursday, OPEC reported that the price of its members’ oil basket increased by $1.01, reaching $79.39 per barrel.
