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International crude oil benchmarks edged higher on Friday, January 3, driven by seasonal demand for heating oil due to colder weather across Europe and the United States, alongside potential disruptions linked to stricter sanctions on Russia and Iran.

Brent for March delivery climbed 0.8% to settle at $76.51/barrel. 

WTI for February delivery rose 1.1% to close at $73.96/barrel.

The upward momentum was fuelled by forecasts of lower temperatures in key markets, which amplified demand for heating oil, offering short-term price support. Additionally, geopolitical concerns over tightening sanctions prompted buyers to realign supply chains, with a notable shift toward Middle Eastern suppliers, further bolstering regional demand and pricing.

However, the rally in crude prices faced headwinds from macroeconomic developments. Expectations of continued resilience in the US economy, coupled with indications of a slower pace of interest rate reductions by the Federal Reserve, strengthened the US dollar. This currency appreciation has the potential to dampen international crude demand by increasing the relative cost for non-dollar buyers.

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Written by: Muhammad Hafiz