Oil prices rose due to a decline in U.S. fuel inventories and Middle East tensions. Brent crude futures increased by 0.57% to $71.18 per barrel, while WTI rose by 0.51% to $67.50. Significant drawdowns in distillate inventories were noted, alongside ongoing conflicts in the Middle East and Venezuela’s oil export plans.
Oil prices experienced an uptick during early trading on Thursday, reflective of both a reduction in U.S. fuel inventories and escalating tensions in the Middle East. Brent crude futures saw an increase of 40 cents, approximately 0.57%, reaching $71.18 per barrel, while U.S. West Texas Intermediate crude (WTI) rose by 34 cents, equating to a 0.51% increase, reaching $67.50.
The rise in prices follows U.S. government data indicating a drawdown in distillate inventories that exceeded expectations. Distillate inventories, encompassing diesel and heating oil, saw a significant decline of 2.8 million barrels last week, compared to the 300,000-barrel decrease anticipated from a Reuters survey. Conversely, crude inventories in the U.S. increased by 1.7 million barrels, surpassing the forecasted rise of 512,000 barrels.
Global risk premiums have heightened due to Israel’s initiation of a new ground operation in Gaza, which disrupted a ceasefire of nearly two months. Furthermore, the U.S. has continued its airstrikes on Houthi targets in Yemen in response to the group’s recent attacks on maritime vessels in the Red Sea, with former President Trump publicly declaring intentions to hold Iran accountable for future Houthi offenses.
Ukrainian President Volodymyr Zelenskiy indicated a potential for a cessation of strikes on energy facilities amidst the ongoing conflict with Russia, suggesting that both parties might be inching closer to a ceasefire. Such a development could pave the way for the easing of sanctions and a possible reinstatement of Russian oil supplies to the market. Steve Witkoff, a Middle East envoy under Trump, confirmed forthcoming discussions between Russian and U.S. officials in Saudi Arabia aimed at negotiating an end to the hostilities.
In industry news, Chevron’s CEO has requested a 60-day extension from the Trump administration to conclude operations in Venezuela, as reported by the Wall Street Journal. Meanwhile, Venezuela’s state-run oil company, PDVSA, is reportedly preparing to sustain oil exports through its joint venture with Chevron, according to Reuters.
In conclusion, the rise in oil prices is attributable to both a significant decline in U.S. distillate inventories and heightened geopolitical tensions in the Middle East. As various conflicts unfold, including actions in Gaza and Yemen, and potential negotiations for a ceasefire between Russia and Ukraine, the oil market remains on unstable ground. Additionally, corporate strategies regarding U.S. operations in Venezuela further contribute to the complexities surrounding global oil supplies.
Original Source: www.cnbc.com
