Oil Rebounds Ahead of US EIA Stock Data
Oil prices rebounded ahead of the US Energy Information Administration (EIA) inventories data amidst uncertainty over the Federal Reserve’s rate cut, and escalating tension in the Middle East, presenting a threat to global oil routes.
ICE Brent crude traded at $84.62 per barrel on Wednesday in the global commodity market, representing an increase of 0.47% from the closing price of $84.22 per barrel in the previous trading session.
The American benchmark West Texas Intermediate (WTI) traded at $81.28 per barrel at the same time, a 0.55% rise from the previous session that closed at $80.83 per barrel.
Market expectation is for crude oil inventories in the US to decrease by 2.6 million. The US Energy Information Administration will release official inventory data later in the day.
Prices are predicted to increase even further if official data from the EIA reveals a fall in oil stockpiles. Meanwhile, ongoing uncertainties over the timing of the Fed interest rate cut continue to influence prices.
Analysts noted that Fed officials want to see more evidence of inflation slowing down and expect growth data to be released on Thursday and personal consumption expenditure data due on Friday to give clues about the Fed’s roadmap in the coming period.
Escalating geopolitical tensions in the Middle East, home to a vast majority of global oil reserves, also supported upward price movements by fueling market players’ concerns over the possibility of a disruption in global energy supply routes.
An Iraqi resistance group announced early Wednesday that a combat drone had struck a target in Eilat, southern Israel. The group, however, did not disclose the nature of the target, but stressed that they would ‘continue to destroy enemy (Israeli) strongholds.’
Yesterday, oil prices came under pressure yesterday driven largely by a stronger US dollar. ICE Brent settled almost 1.2% lower on the day.
“We could see further pressure in the immediate term after the American Petroleum Institute (API) numbers overnight came in more bearish than expected”, ING commodities strategists said in a midweek note.
The API reported that US crude oil inventories increased by 914k barrels last week, compared to expectations for a 2.8m barrel draw. In addition, gasoline stocks increased by 3.8m barrels, while distillates saw a decline of 1.2m barrels.
The market was expecting draws in both gasoline and distillates. However, analysts said the market is likely to find some support along the 100-day moving average, while more broadly, tightening fundamentals through the third quarter of the year. Sell Pressure on Nigerian Bonds Drives Yield Highers
