WTI rises to $74 on likelihood of heating fuel demand

West Texas Intermediate extended gains for the second successive session, trading around $73.90 per barrel during the European hours on Friday.

Crude oil prices are bolstered by expectations of higher heating fuel demand due to extended cold weather across the northern hemisphere.

The U.S. Weather Bureau predicts below-average temperatures in central and eastern regions of the country. Similarly, much of Europe has been gripped by severe cold and is likely to face an unusually chilly start to the year.

According to Reuters, analysts at JP Morgan credit the oil price increases to mounting concerns over supply disruptions caused by tighter sanctions, combined with low oil inventories and freezing conditions across parts of the US and Europe.

Oil prices are also climbing due to heightened concerns over supply disruptions fueled by ongoing geopolitical tensions. US President Joe Biden is expected to announce new sanctions this week targeting Russia’s oil revenues, aiming to strengthen Ukraine’s resistance against Moscow ahead of President-elect Donald Trump taking office on January 20.

On Friday, ING analysts mentioned in a note that, “uncertainty surrounding how aggressive Trump will be toward Iran is offering additional support to crude oil prices.”

They also highlighted that Asian buyers are already seeking alternative grades from the Middle East, as broader sanctions on Russia and Iran complicate crude oil trade flows.

(Source: OANDA)