WTI improves to near $74.70 over global energy supplies, air strikes against Houthis

West Texas Intermediate (WTI) price extends its gains for the second successive session, improving to near $74.70 per barrel during the Asian session on Tuesday. The rise in Crude oil prices is attributed to concerns over global energy supplies, sparked by a drone strike on Russia's Novatek by Ukraine. Additionally, disruptions in Crude production from the United States (US) due to extreme cold weather have contributed to the upward pressure on oil prices.

Reports from both the BBC and the Wall Street Journal indicate that Ukraine conducted a drone attack on a Russian fuel terminal using explosives. Furthermore, North Dakota's pipeline authority has stated that over 20% of the state's oil output remained shut in on Monday due to severe cold weather. These developments highlight the multifaceted factors influencing oil markets, which can contribute to fluctuations in Crude oil prices.

The situation in the Red Sea is becoming increasingly precarious as Iran-backed Houthi rebels continue to escalate attacks on maritime ships. This poses a significant risk to oil supply disruptions, especially in the context of mounting instability that could potentially spill over into the Middle East countries. Moreover, US officials have confirmed a fresh round of military action, including air strikes, against Iran-backed Houthi terrorist targets in Yemen. This further adds to the geopolitical tensions in the region, contributing to the overall volatility in energy markets.

Meanwhile, in Libya, the state-run National Oil Corporation has reported that the Sharara oilfield resumed operations on Sunday. This development brings back the supply of 270,000 barrels per day (bpd), contributing to 1 million bpd for the OPEC country.

In 2023, Russia emerged as the largest crude oil exporter to China, surpassing Saudi Arabia, despite Western sanctions to restrict Russian oil trade. According to Chinese customs data, Russia sold approximately 2.14 million barrels per day (bpd) of crude oil to China during the mentioned period.

Market participants will likely watch the upcoming Crude Oil Stock data closely, with the American Petroleum Institute (API) set to release its report for the week ending on January 19 on Tuesday. This will be followed by the Crude Oil Stocks Change data from the US Energy Information Administration (EIA) scheduled for Wednesday.