(London) Oil prices move up slightly on Friday, but without managing to increase their gains with the easing of fears of supply disruptions via the Red Sea, and European natural gas is preparing to end 2023 in sharp decline.

Around 7:45 a.m., the price of a barrel of Brent from the North Sea, for delivery in March, on its first day of use as a reference contract, rose 0.56%, to 77.58 dollars.

Its American equivalent, a barrel of West Texas Intermediate (WTI), for delivery in February, gained 0.45%, to $72.09.

“The continued threat of an extension of conflict in the Middle East means that oil markets must remain vigilant about supply-side risks,” commented Exinity analyst Han Tan. But the weak market reaction is because the “geopolitical risk premium” has already been “priced in,” he explained.

Both global oil benchmarks are on track to end the year down around 10%.

Efforts by OPEC (Organization of the Petroleum Exporting Countries and their allies) to cut production, along with growing geopolitical tensions in the Middle East, “have remained surprisingly ineffective in stimulating appetite for oil this year,” summed up Swissquote analyst Ipek Ozkardeskaya.

Crude prices, however, took off with the offensive by the Palestinian Islamist movement Hamas against Israel on October 7, with the market fearing a geopolitical escalation and supply disruptions.

Without immediate impact on the balance between oil supply and demand, the attack nevertheless aroused strong fears, particularly regarding the possible involvement of Iran in the conflict. The market then quickly estimated that the war should not spread to neighboring countries, major oil producers and exporters.

And although OPEC has been slashing its black gold production for months, with voluntary reductions by certain members, crude prices have fallen.

The alliance’s strategy had nevertheless worked for a time, before slipping. Brent had even come close to $100 per barrel at the end of September, driven by strong fears of a significant market supply deficit at the end of the year.

Since then, prices have fallen sharply, with the loss of power of the group and disagreements between its members leaving investors more skeptical.

OPEC and its partners now control just over half of global crude production (50 million barrels per day), according to the latest report from the International Energy Agency (IEA), i.e. the lowest share since the establishment of OPEC in 2016.

The December 21 withdrawal of Angola from the alliance, a country which refuses to reduce its production and wants to “focus more” on its own objectives, exposed tensions within the group to broad daylight.

On the European natural gas side, the Dutch TTF futures contract, considered the European benchmark, was trading on Friday at 32,535 euros per megawatt hour (MWh), down 1.7%.

DNB analysts point out that “European gas demand remains weak, even if seasonal variations are taken into account” with the recent cold spells.

After the Hamas attack on Israel, gas prices temporarily jumped, particularly after the announcement of the closure of a major Israeli gas field.

Strikes and threats of strikes at major liquefied natural gas installations in Australia, a major producing country, also boosted prices for a time at the end of the summer.

But the trend remains sharply downward, with European natural gas on track to end the year plummeting by more than 57%.

“So far, the winter has been warmer than normal on average […] and Europe’s storage levels are high, even compared to last year,” said Lu Ming Pang, an analyst from Rystad Energy.