Apr 24 2024: Oil prices continued to climb on Wednesday following unexpected data showing a decrease in U.S. crude inventories last week, signaling improved demand. Concurrently, market attention remained on developments in the Middle East, influencing the trajectory of oil markets.
Brent crude futures increased by 26 cents, or 0.29%, reaching $88.68 a barrel, while U.S. West Texas Intermediate crude futures rose by 26 cents, or 0.31%, reaching $83.62 a barrel as of 0634 GMT.
According to reports from market sources citing American Petroleum Institute figures, U.S. crude inventories dropped by 3.237 million barrels in the week ending April 19. This surprising decline contrasted with expectations of an 800,000-barrel increase, as forecasted by six analysts polled by Reuters.
Traders await official U.S. data on oil and product stockpiles scheduled for release at 10:30 a.m. EDT (1430 GMT) to confirm the substantial drawdown.
In economic news, U.S. business activity slowed down in April to a four-month low, as indicated by S&P Global’s flash Composite PMI Output Index, which tracks the manufacturing and services sectors.
“This could help convince policymakers that rate cuts are required to support the economy,” noted ANZ analysts in a report.
Potential U.S. interest rate cuts could stimulate economic growth and subsequently boost demand for oil, especially from the world’s largest consumer of the fuel.
While analysts remain optimistic that ongoing developments in the Middle East will uphold market sentiment, the immediate impact on oil supplies remains contained.
“Crude oil prices are well supported at current levels by the ongoing Middle East risk premium. However, the risk of a possible renewed OPEC production increase from June will help limit significant upside,” remarked Heng Koon How, head of markets strategy for United Overseas Bank (UOB) in Singapore.
“We maintain our forecast for Brent to consolidate at USD 90/bbl by the end of this year,” Heng added.
Recent Israeli strikes intensified across Gaza on Tuesday, although reports suggest a temporary cessation of operations between Iran and Israel. Additionally, preparations for new sanctions against Iran by the U.S. and Europe may not immediately impact oil supply.
