By Mohi Narayan and Florence Tan
NEW DELHI (Reuters) – Oil prices struggled to advance on Monday as economic contractions weighed on the global oil demand outlook and offset geopolitical concerns in the Middle East and an attack on a Russian fuel export terminal over the weekend.
Brent crude was down 54 cents on Friday and was down 9 cents, or 0.1%, at $78.47 a barrel by 0353 GMT.
Front-month US West Texas Intermediate crude futures for February delivery rose 11 cents to $73.52 a barrel, with the contract expiring on Monday. The most active March WTI contract was at $73.21 a barrel, down 4 cents.
„The subdued reopening this morning despite ongoing geopolitical tensions in Europe and the Middle East speaks to current sentiment in the crude oil market,” IG analyst Tony Sycamore said.
Prices were little moved despite reports of a Ukrainian drone attack on a major Russian fuel export terminal. Russian producer Novatek was forced to halt some operations on Sunday after a fire broke out at a Baltic Sea terminal.
In the absence of major increases, crude is trading within a range, with some downward pressure, said Vandana Hari, founder of oil market analysis provider Vanda Insights.
In the Middle East, the Gaza war has intensified, while the US prepares to launch another anti-ship missile into the Gulf of Aden by Yemen's Houthi militias.
Attacks by an Iran-aligned group in the Red Sea and Gulf of Aden have disrupted global trade. It also tightened European and African crude oil markets and pushed the premium over the first-month Brent contract to $1.99 for the six-month contract on Friday, the highest since November. This system, known as lag, refers to the perception of tight supply for immediate supply.
IG's Sycamore said oil fundamentals remain a headwind for prices.
He added that oil „production remains high and the growth outlook in China and Europe is mixed at best, while GDP data showed the U.S. economy slowed significantly this week.”
The latest demand growth projections from the US Energy Information Administration, the International Energy Agency and the Organization of the Petroleum Exporting Countries for 2024 range widely between 1.24 million and 2.25 million barrels per day, although all three agencies expect demand to decline. 2025. [EIA/M] [IEA/M] [OPEC/M]
The number of operating oil rigs in the U.S. fell by two last week to 497, the lowest since mid-November, Baker Hughes data showed on Friday.
(Reporting by Mohi Narayan and Florence Tan; Editing by Christian Schmollinger and Sri Navaratnam)
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