- WTI crude oil advances by 1.46% to reach $78.91, bolstered by a reduction in US crude inventories and concerns over geopolitical tensions impacting supply.
- According to the EIA report, gasoline stocks experienced a larger-than-anticipated decline, while crude inventories decreased against projections.
- Investor focus now shifts towards updates from OPEC and the IEA regarding oil demand, with potential implications for future price movements. Additionally, shifts in Fed policy could also influence market dynamics going forward.
On Wednesday, West Texas Intermediate (WTI), the US crude oil benchmark, experiences a 1.46% increase, rebounding from a daily low of $77.33 during the early North American session. Geopolitical tensions pose a threat to supply, while anticipation mounts regarding the potential initiation of an easing cycle by the Federal Reserve, providing support to oil prices. As of the current moment, WTI is trading at $78.91.
Oil prices gain as supply concerns intensify, Fed easing speculations grow
The US Energy Information Administration (EIA) released data indicating a 1.5 million barrel decline in crude oil inventories from the previous week, falling short of analysts’ expectations of a 1.34 million barrel increase. Additionally, gasoline inventories plummeted nearly three times more than anticipated, while distillate fuels saw growth. The US Strategic Petroleum Reserve also expanded from 361 million barrels to 361.8 million as part of inventory restocking efforts. Following the release of this data, WTI surged to a high of $79.32 before settling below the $79.00 mark.
Geopolitical developments remained a driving force behind oil price movements. Ukraine’s attack on Russian refineries, resulting in a fire at an oil refinery on Wednesday, added to the ongoing tensions. Russian President Vladimir Putin characterized it as an attempt to disrupt Russia’s presidential election.
Meanwhile, the Organization of the Petroleum Exporting Countries (OPEC) maintained its forecast for oil demand growth of 2.25 million barrels per day in 2024, surpassing analysts’ expectations.
On Thursday, the International Energy Agency (IEA) is expected to provide its updated figures, which are anticipated to be lower than OPEC’s projections.
In addition to these factors, speculations surrounding potential interest rate cuts by major central banks could drive WTI prices upward. The commencement of policy easing by the Federal Reserve may exert pressure on the Greenback, thereby favoring an increase in oil prices.
