Oil Prices Rise Due to Tighter Supply and Positive US Job Data

By Katya Golubkova

TOKYO - On Wednesday, oil prices experienced an increase, influenced by reduced supplies from OPEC and Russia. The rise in prices coincided with new data indicating a surprising rise in job openings in the United States, reflecting stronger economic activities and anticipated growth in oil demand.

Brent crude oil saw an uptick of 32 cents, or 0.42%, reaching $77.37 per barrel. Meanwhile, U.S. West Texas Intermediate crude rose by 42 cents, or 0.57%, to $74.67.

A recent survey highlighted that oil production from the Organization of the Petroleum Exporting Countries (OPEC) fell in December after two months of increases. Maintenance activities in the United Arab Emirates countered a rise in Nigerian oil output and other improvements within the group.

Russia's oil production averaged 8.971 million barrels a day in December, which is below the targeted production levels, as reported by Bloomberg.

On the employment front, job openings in the U.S. rose in November, and layoff figures remained low, suggesting that workers are hesitant to leave their jobs. The Job Openings and Labor Turnover Survey pointed towards a recovering labor market.

According to Capital Economics, "The November JOLTS data, together with recent employment reports, indicates a labor market returning to pre-pandemic norms." They further noted that rising oil prices are often linked with economic growth.

However, the overall market sentiment reflected a different trend as U.S. stocks declined in the previous week, with increasing fuel inventories, according to sources referencing American Petroleum Institute statistics.

Looking ahead, analysts predict that average oil prices will decline in 2024, partly due to increased production from non-OPEC nations. BMI, a division of Fitch Group, stated in recent notes that they maintain a forecast for Brent crude to average $76 per barrel in 2025, down from an average of $80 in 2024.

Market outlooks remain cautious with a 'bearish' perspective supported by forecasts suggesting an oversupply, as supply growth is expected to exceed demand growth by 485,000 barrels per day.

Oil, Prices, Economy