Oil prices climb as U.S. crude stockpiles rise less than anticipated
Oil prices climbed for the third consecutive day on Wednesday, buoyed by industry data indicating a smaller-than-expected increase in U.S. crude inventories. Additionally, a downward revision in the forecast for output growth in the United States, the world’s largest producer, alleviated concerns regarding potential oversupply.
Brent crude futures edged up 10 cents to reach $78.69 a barrel as of 0728 GMT, while U.S. West Texas Intermediate crude gained 13 cents, trading at $73.44.
The American Petroleum Institute reported that U.S. crude stocks increased by 670,000 barrels in the week ending Feb. 2, significantly lower than the forecasted 1.9 million barrel build anticipated by analysts polled by Reuters.
The U.S. government’s weekly data on oil inventories is scheduled to be released later on Wednesday.
In its latest forecast, the U.S. Energy Information Administration (EIA) lowered its projection for domestic oil output growth in 2024 by 120,000 barrels per day (bpd) to 170,000 bpd. This figure marks a significant decline compared to the previous year’s output increase of 1.02 million bpd.
The EIA also anticipates that U.S. production will not surpass the December 2023 record of over 13.3 million bpd until February 2025.
Analysts at Haitong Futures highlighted that the outlook strengthens the case for a balanced oil market in 2024. They anticipate oil prices to remain within a $10 range around current levels.
U.S., Qatari, and Egyptian mediators are gearing up for diplomatic efforts to reconcile differences between Israel and Hamas regarding a ceasefire plan for Gaza. This initiative comes after Hamas responded to a proposal for an extended pause in hostilities and the release of hostages.
Traders are closely monitoring developments in the Middle East, particularly the assaults on shipping vessels by Iranian-backed Houthi rebels in the strategic Red Sea. These attacks have disrupted traffic flow through the Suez Canal, a vital maritime route handling nearly 12% of global trade, connecting Asia and Europe.
On Tuesday, the Houthis reported launching missiles at two vessels in the Red Sea, resulting in damage to the ships.
“Given the heightened geopolitical risk, the rangebound trading and lack of a risk premium may surprise some,” said ING analysts Warren Patterson and Ewa Manthey in a note.
“It’s important to remember that while we are seeing disruptions to trade flows as a result of Red Sea developments, oil production remains unchanged as a result.”
The consortium led by Exxon Mobil (NYSE:XOM), which oversees all oil production in Guyana, is currently pumping approximately 645,000 barrels per day (bpd) in the South American nation. This marks an increase from about 400,000 bpd in late 2023.
Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 80.38% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
