Brent drops as market enters a state of ‘wait-and-watch’

The front-month ICE Brent contract has inched $0.12/bbl lower on the day, to trade at $79.30/bbl at 09.00 GMT.

PHOTO: Oil pump jacks at dusk. Getty Images

Upward pressure:

Brent futures found some support following news that a rare winter storm across the US Gulf Coast has disrupted oil production around the region.

North Dakota's oil production has dropped by about 130,000-160,000 b/d due to extreme cold weather and related operational challenges, Reuters reported quoting the state's pipeline authority.

A “historic winter storm” is disrupting oil and gas production facilities in Texas, ANZ Bank’s senior commodity strategist Daniel Hynes remarked. “The frigid weather is expected to crimp oil production due to freezing water in wells and pipes,” he added.

Downward pressure:

The global oil market has shifted its focus from oil sanctions against Russia and weighed the US President Donald Trump’s declaration of a national energy emergency on the first day of his second term in the Oval Office.

Trump has laid out an elaborate plan to ramp up oil production in the country, withdrawing the US from the Paris Climate Agreement, again.

“Oil futures took a dip… with traders recalibrating their expectations for crude supplies following President Donald Trump's pledge to amplify the US's already record-high crude output,” SPI Asset Management managing partner Stephen Innes said.

Market participants are also cautious following Trump’s warning of imposing 25% tariffs on all imports from Canada and Mexico from 1 February.

“Oil prices fell after President Trump expanded his tariff threats from Canada and Mexico to Europe and China, potentially triggering a global trade war that may ultimately hurt [demand] growth,” analysts from Saxo Bank said.

By Aparupa Mazumder

Please get in touch with comments or additional info to news@engine.online