Oil Trades Above $81 as US Crude Inventories Fall
Oil prices increased on Wednesday as U.S crude inventories fell for seven consecutive weeks amidst geopolitical tensions in the Middle East. The oil market rallied following a larger-than-expected oil inventory withdrawal reported by the American Petroleum Institute (API).
Brent crude rose 0.7% to $81.25 per barrel, according to data from the global commodity market. US benchmark West Texas Intermediate (WTI) increased 0.7% to $78.92 per barrel, after closing at $78.35 in the prior session.
If confirmed by the Energy Information Administration (EIA), this would be the seventh weekly decline in a row, ING commodities strategists Ewa Manthey and Warren Patterson said in a note.
Analysts said geopolitical risks in the Middle East remain elevated, with the market allocating an increased risk premium for oil because of uncertainty over any Iranian response to Israel.
The API reports that US crude oil inventories fell significantly by 5.2 million barrels last week, compared to the market expectations for a draw of just 0.9 million barrels.
Crude stockpiles at Cushing decreased by 2.3 million barrels, ING said. Product inventories remained mixed, with gasoline stocks falling by 3.7 million barrels while distillate inventories rose by 612k barrels. The more widely followed EIA inventory report will be released later today.
The IEA’s monthly oil market report was somewhat bearish, with the agency slightly revising down its demand growth forecasts for next year. It now expects global oil demand to grow by 950,000 b/d in 2025, down 30,000 b/d from their previous estimates.
This revision lower is largely due to the impact of weaker Chinese consumption. However, the IEA left the demand estimates unchanged at 970, 000 b/d for 2024.
Earlier, OPEC also lowered its forecasts for global oil demand for both this year and next; however, the difference in demand growth numbers between the IEA and OPEC continues to stand out.
On the supply side, the IEA estimates global supply to increase by 730,000 b/d in 2024 and 1.9 million b/d in 2025 as OPEC+ supply gradually returns to the market. Non-OPEC+ production is seen increasing by 1.5m b/d for both this year and next.
In solidarity with the Gaza Strip, which has been under an Israeli onslaught since last October, Yemen’s Houthi group has been targeting Israeli-linked cargo ships in the Red Sea and the Gulf of Aden.
The conflict in the Red Sea, one of the world’s most frequently used sea routes for oil and fuel shipments, lent support to upward price movements by fueling concerns that rising tensions in the region might disrupt the global oil supply. #Oil Trades Above $81 as US Crude Inventories Fall
