(Reuters) – Oil prices rose in early Asian trading and were on track for gains for the third week in a row, as icy conditions in parts of the United States and Europe increased demand for fuel for heating purposes.
By 0602 GMT, futures rose 40 cents, or 0.5 percent, to $77.32 per barrel. US West Texas Intermediate crude futures gained 38 cents, or 0.5%, to $74.30.
Over the three weeks ending January 10, Brent advanced 6% while WTI jumped 7%.
Analysts at JP Morgan Bank attributed the gains to growing concern about supply disruptions due to tightening sanctions, amid declining oil inventories, freezing temperatures in many parts of the United States and Europe, and improving sentiment regarding Chinese stimulus measures.
The US Weather Bureau expects the central and eastern parts of the country to witness below-average temperatures. Many regions in Europe have also been hit by extreme cold and are likely to continue to experience a cooler-than-normal start to the year, which JP Morgan analysts expect will boost demand.
“We expect a significant year-over-year increase in global oil demand of 1.6 million barrels per day in the first quarter of 2025, supported primarily by… demand for kerosene and liquefied petroleum gas,” JPMorgan said in a note on Friday. .
Meanwhile, the premium of the first-month Brent contract over the six-month contract reached its largest level since August this week, which may indicate tight supply at a time of high demand.
Oil prices rose despite the strength of the US dollar for six consecutive weeks. The rise in the dollar usually affects prices because it makes it expensive to buy crude oil outside the United States.
Supplies could be further affected as US President Joe Biden is expected to announce new sanctions targeting the Russian economy this week in an attempt to bolster Ukraine's war efforts against Moscow before President-elect Donald Trump takes office on January 20. Russia's oil industry has been far behind.
ING analysts said in a report: “Uncertainty about the extent of Trump’s toughness with Iran will provide some support. Asian buyers are already looking for alternative crudes from the Middle East, with broader sanctions against Russia and Iran making the flow of oil more difficult.” Note on Friday.
