Oil is on track for its most significant weekly decline since early November as negotiations progress for a potential agreement to halt the Israel-Hamas conflict, signaling a potentially crucial step towards resolution. Although West Texas Intermediate saw a modest increase to over $74 a barrel on Friday, it still recorded nearly a 5% drop for the week. Brent experienced a second consecutive session decline on Thursday. Talks on a ceasefire are in the early stages, with no imminent breakthrough anticipated in the coming days, according to sources familiar with the matter.
Despite the positive developments in the negotiation process, concerns persist about the potential escalation of tensions in the Middle East. Houthi rebels based in Yemen continue to target shipping in the Red Sea and Gulf of Aden. Additionally, the market is awaiting a U.S. response to a recent drone assault that resulted in the death of American troops in Jordan over the weekend.
While oil marked a monthly gain in January following attacks on commercial shipping in the Red Sea, robust supply levels and apprehensions regarding demand from major consumers have prevented significant price increases. OPEC+ indicated on Thursday that it intends to maintain output cuts during this quarter. According to a Bloomberg survey, OPEC reduced daily oil production by 490,000 barrels last month as part of its efforts to prevent a global glut and support prices.