WTI and Brent Crude Oil

Oil Price Fundamental Daily Forecast – Speculators Betting on Kazakhstan Supply Issues to Escalate

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures edged lower on Friday, as traders weighed supply concerns from the unrest in Kazakhstan and outages in Libya against a U.S. jobs report that missed expectations and its potential impact on Federal Reserve policy.

On Friday, March WTI crude oil futures settled at $78.44, down $0.44 or -0.56%. March Brent crude oil finished at $81.75, down $0.24 or -0.29% and the United States Oil Fund closed at $56.67, down $0.22 or -0.39%.

Once again, it comes down to supply and demand except this time, supply concerns seem to be providing support. Demand did enter into the equation on Friday, however, with the employment report headline miss injecting some fears about the impact of Omicron.

All Eyes on Kazakhstan Escalation

With news scare since last Tuesday’s OPEC+ decision to increase production in February, traders have shifted their focus to escalating unrest in Kazakhstan and its potential impact on supply since the country is an OPEC+ supplier.

According to Reuters, security forces appeared to have reclaimed the streets of Kazakhstan’s main city on Friday after days of violence, and the Russian-backed president said he had ordered his troops to shoot to kill to put down a countrywide uprising.

A day after Moscow sent paratroopers to help crush the insurrection, police were patrolling the debris-strewn streets of Almaty, although some gunfire could still be heard.

Kazakhstan Production Reduced

Production at Kazakhstan’s top oilfield Tengiz was reduced on Thursday, its operator Chevron Corp said, as some contractors disrupted train lines in support of protests taking place across the central Asian country.

Kazakhstan is a major oil producer with output of about 1.6 million barrels per day (bpd) in recent months, and has rarely seen production disrupted by unrest or natural disaster.

“TCO production operations continue, however, there has been a temporary adjustment to output due to logistics,” Chevron, the largest foreign oil producer in Kazakhstan with a 50% stake in the Tengizchevroil (TCO) joint venture, said in a statement.

Protesters at the field have disrupted train activity which is used to export oil, sources told Reuters.

TCO produces around 700,000 bpd. It was not clear by how much output has been reduced. Other top fields in Kazakhstan are onshore Karachaganak and offshore Kashagan.

Besides Chevron, the three key projects involve most top foreign companies including Exxon Mobil, Lukoil, Royal Dutch Shell, Eni, Total Energies, CNPC and Inpex.

A Shell spokesperson said production at the Karachaganak and Kashagan ventures was continuing.

Short-Term Outlook

At the start of trading next week, traders will be monitoring the developments in Kazakhstan closely. Among the situations being eyed are operations, which are currently being kept under constant review by the oil companies.

For a look at all of today’s economic events, check out our economic calendar.

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James Hyerczyk

James A. Hyerczyk has worked as a fundamental and technical financial market analyst since 1982. His technical work features the pattern, price and time analysis techniques of W.D. Gann.