Despite the ceasefire news between Israel and Hamas, which was considered a factor for oil price decline, international oil prices rose to their highest level in 5 months. It is analyzed that the slowdown in the US core consumer price increase and the closure of some pipelines in the US influenced the rise in oil prices.
On the 15th (local time) at the New York Mercantile Exchange, the near-month February delivery West Texas Intermediate (WTI) crude oil closed at $80.04 per barrel, up 3.28% from the previous session. This is the highest closing price in about 5 months since August 12 last year. On the same day, the March delivery Brent crude oil price, a global benchmark, closed at $82.03, up 2.64% from the previous session at the ICE Futures Exchange. This is also the highest level since August 12 last year. On this day, the Israeli military and the Palestinian armed faction Hamas suddenly agreed to a ceasefire after 15 months since the outbreak of the Gaza Strip war. Generally, news of easing tensions in the Middle East is considered a factor for oil price decline.
However, it is analyzed that the slowdown in the US core Consumer Price Index (CPI) growth led to the rise in oil prices. According to the US Department of Labor on this day, the core CPI, which excludes volatile energy and food prices, rose 0.2% from the previous month in December last year. This met market expectations. It was 0.1 percentage points lower than the previous month. The month-on-month increase rate of the core CPI, which had been 0.3% for four consecutive months, declined. As a result, the possibility of the Federal Reserve (Fed) cutting interest rates revived, stimulating investment sentiment in crude oil.
The weakness of the dollar also contributed to the rise in oil prices. The dollar index, which shows the value of the dollar against six major currencies, fell below the 109 level after the US CPI announcement. Since crude oil is priced in dollars, when the dollar value falls, demand for crude oil among buyers using other currencies can increase.
On this day, the closure of some pipelines in Georgia by the US Colonial Pipeline due to a gasoline leak raised concerns about supply disruptions, which also caused oil prices to rise. The pipelines closed by this company transport 1.5 million barrels per day of gasoline and diesel between Texas and North Carolina. The closure is estimated to continue until as early as the 17th.
The impact of US sanctions on the Russian oil industry is a factor putting continuous upward pressure on crude oil prices. Countries such as China and India, which have been importing Russian crude oil, are turning to crude oil from other countries. Ole Hansen, Head of Commodity Strategy at Saxo Bank, said, "Oil tankers carrying Russian crude oil seem to be having difficulties unloading cargo worldwide," and evaluated that "this could potentially cause short-term tightening."
On this day, the International Energy Agency (IEA) revised down the global crude oil supply surplus for this year from 950,000 barrels per day to 725,000 barrels per day. The US Energy Information Administration (EIA) announced that as of the week ending on the 10th, US crude oil inventories decreased by 2 million barrels from the previous week to 412.7 million barrels. This was a larger decrease than the market expectation of 1.6 million barrels.
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