January 11, 2024 (MLN): Oil prices advanced on Thursday despite a surprise rise in U.S. crude stockpiles, driven by escalating concerns over the Middle East conflict and fresh attacks on shipping in the Red Sea.
Brent crude is currently trading at $77.2 per barrel, up by 0.9% on the day.
Meanwhile, West Texas Intermediate crude (WTI) is trading at $71.94 per barrel, up by 0.89% compared to the previous close.
The benchmarks settled lower on Wednesday after a surprise jump in U.S. crude stockpiles raised worries about demand in the largest oil market, as Reuters reported.
However, market jitters resurfaced after Yemen-based Houthis mounted their largest attack yet on commercial shipping lanes in the Red Sea on Wednesday. Israeli strikes in southern and central Gaza also intensified on Wednesday.
The U.S. and Britain hinted they would take further measures if the attacks continued, and the UN Security Council passed a resolution demanding an immediate end to the strikes.
"Oil prices seem to be in a state of indecision this week, as market participants attempt to digest a confluence of factors," said Yeap Jun Rong, market strategist at IG, pointing to geopolitical tensions in the Middle East, conflicting inventory reports in the U.S. and slow global growth.
"The latest EIA data serves as a dampener to the higher-than-expected drawdown in US crude inventories reflected in the API data yesterday, which drove some unwinding of earlier gains," Yeap said.
U.S. crude inventories increased by 1.3 million barrels in the week ended on Jan. 5 to 432.4m barrels, the EIA said on Wednesday, against analyst expectations for a 700,000-barrel draw.
All eyes now are on U.S. inflation data which will shape views on how soon the Federal Reserve might cut interest rates.
"An unexpected rise in U.S. crude inventories prompted concerns about crude oil demand. But revised expectations for a rate cut should support oil prices, as the economy is slowing down lower than Fed forecast," said Leon Li, analyst at CMC Markets.
"Oil prices may have support above $70 until we see more data demonstrating increased downward pressure on the economy," said Li.
Looking ahead, China's customs administration will release December trade data on Friday, giving a full-year picture of overall demand in the world's largest oil buyer.
Copyright Mettis Link News
Posted on: 2024-01-11T11:39:21+05:00
