The ICDX oil contract price closed higher at $73.92 per barrel for the week ended January 5. Oil prices rose due to the increasingly heated conflict between Israel and Hamas. Also pushing up oil prices, the closure of oil fields in Libya also increased oil prices this week.
ICDX oil prices have increased due to the heated conflict in the Middle East, especially between Israel and Hamas, which has created a significant infection in the global oil market. Israel launched a drone strike in the Lebanese capital, Beirut, and killed Hamas deputy leader Saleh al-Arouri. The situation in Gaza is becoming increasingly tense. Lebanese and Palestinian security sources highlighted the potential risk that war could spread in the region, adding to oil conditions.
Apart from the conflict in the Middle East, the increase in oil prices was also triggered by the closure of the main oil fields in Libya. The halt in oil production from the Sharara and El-Feel fields, which averaged 300,000 barrels per day, was intended to keep oil prices from falling too far. This production disruption significantly affected global oil supplies and contributed to the increase in oil prices on the international market.
With Israeli attacks on the Gaza Strip and indications that war could spread to Lebanon, fears of further disruptions in oil supplies are increasing. The combination of geopolitics in the Middle East and production disruptions in Libya provided a boost to oil prices, which may continue as the region progresses regarding production
Slowing Manufacturing Activity in America
A recent report shows just how slow manufacturing activity in America is. American economic data, especially the manufacturing Purchasing Managers' Index (PMI) compiled by S&P Global, showed an increase of 0.5 but remained below the 50 mark in December. America's S&P Global Manufacturing PMI weakened to 46.2, signaling a slowdown in manufacturing activity and putting additional pressure on oil prices.
Surge in COVID Cases and Flu Affect Economy and Oil Prices
Hospitals in at least four U.S. states reintroduced mask-wearing mandates in response to a surge in COVID cases, seasonal flu, and other respiratory illnesses. The latest data from the Centers for Disease Control and Prevention (CDC) revealed a more than 16% increase in COVID-related hospitalizations across the U.S. from December 17th to 23rd, along with over 14,700 flu-related hospitalizations during the same period. The impact of the rising COVID cases not only affects the health sector but also poses economic challenges, which may contribute to a decline in oil prices.
US - S&P Global Manufacturing PMI Final
US - ISM Manufacturing PMI (Dec)
US - API Crude Oil Stock Change
CNY - Caixin Service PM
US - EIA Crude Oil Stock Change
Source: ICDX Research