Oil futures were flat to slightly lower Friday, on track for weekly gains as traders weighed growing supplies, the demand outlook and continued tensions in the Middle East.
West Texas Intermediate crude for February delivery
the most actively traded contract, was off 11 cents, or 0.1%, at $73.84 a barrel, on track for a 1.6% weekly rise.
March Brent crude
the global benchmark, was down 12 cents, or 0.2%, at $78.98 a barrel on ICE Futures Europe, up 0.9% for the week.
“Oil prices remain violently rangebound to start the year,” said Michael Tran, commodity analyst at RBC Capital Markets, in a note. “While the this sentence sounds like an oxymoron, keen observers of the market have become numb or achieved a degree of analysis paralysis to start the year given the confluence of escalating geopolitical risk enveloped in a market that remains reasonably well supplied.”
Pakistan and Iran traded military strikes this week and U.S. forces launched new strikes against Iran-backed Houthi militants who have continued to target Red Sea shipping with missile and drone attacks. That’s caused disruption to shipping, including the rerouting of oil tankers, but has yet to diminish the flow of crude out of the Middle East.
“Historical rules of thumb regarding traditional shipping lanes continue to be rewritten, though some may argue that rewriting the rules of transport is simply yet another chapter in an escalating list of trade flow disruptions dating back to Russia’s invasion of Ukraine,” Tran said
Liquidity, meanwhile, remains soft and positioning remains uninspiring as investors grapple with the push and pull between geopolitical reality squared off against a significant amount of available spare capacity, Tran said.