Reuters: Oil creeps higher as geopolitics outweigh demand concerns

Oil prices edged higher on January 22 as traders weighed the impact of wars in the Middle East and Ukraine on oil supply against economic headwinds pressuring global oil demand.

Brent crude rose 22 cents to $78.78 a barrel by 1141 GMT, according to Reuters.

The front-month U.S. West Texas Intermediate crude futures contract for February delivery was up 31 cents at $73.72 a barrel in tepid trade, with the contract set to expire on Monday. The more active March WTI contract was up 26 cents at $73.51.

There are no signs of respite in Israel’s offensive against Gaza while attacks by Iran-aligned Houthis on commercial vessels in the Red Sea have continued despite retaliatory measures from the United States.

The situation has served to tighten European and African crude markets and on January 19 pushed the front-month Brent contract's premium to the six-month contract to its widest since last November.

Meanwhile, Russian energy company Novatek has been forced to suspend some operations at its Baltic Sea fuel export terminal because of a fire, it said on January 22.

The issue, which is expected to disrupt naphtha flows to Asia, could be resolved within weeks, analysts told Reuters.

Oil production is higher while the growth outlook in China and Europe is mixed at best and GDP data this week is expected to show the velocity of the U.S. economy has slowed considerably, he said.

The latest demand growth forecasts by the U.S. Energy Information Administration, the International Energy Agency and the Organization of the Petroleum Exporting Countries for 2024 are in a wide range between 1.24 million and 2.25 million barrels per day, though all three organisations expect demand growth to slow in 2025.