Oil prices continued their upward trajectory amid investor apprehensions regarding potential disruptions in supply due to escalating geopolitical tensions, on Wednesday. However, some of these concerns were mitigated by an unexpected increase in U.S. crude oil inventories.
Brent crude futures climbed by 84 cents, representing a 0.9% increase, reaching $89.76 per barrel by 11:38 a.m. ET (1538 GMT). Similarly, U.S. West Texas Intermediate futures experienced a gain of 76 cents, or 0.9%, reaching $85.91 per barrel.
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During the session, both contracts experienced an increase of over one dollar each before the U.S. Energy Information Administration disclosed a 3.2 million barrel rise in crude stocks. Analysts surveyed by Reuters had anticipated a reduction of over 1.5 million barrels, aligning with the preliminary data released by the American Petroleum Institute on Tuesday.
What’s weighing on crude oil prices?
- Brent and WTI futures have surged to their highest levels in over five months, maintaining this momentum for three straight sessions. This rally is driven by apprehensions regarding Ukraine’s recent assaults on Russian refineries, alongside fears of a potential escalation of conflict in the Middle East, both of which could disrupt oil supplies.
- Iran has pledged retaliation against Israel following an assault on Monday that resulted in the death of senior military figures. As a significant supporter of the Hamas militia engaged in conflict with Israel in Gaza, Iran holds the position as the third-largest producer within the Organization of the Petroleum Exporting Countries (OPEC).
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- In a note released on Wednesday, Bank of America Global Research revised its 2024 Brent and WTI forecasts upward to $86 and $81 per barrel, citing strengthening demand and increasing political tensions. Meanwhile, during a meeting of the top OPEC ministers on Wednesday, the oil output policy remained unchanged, with pressure exerted on some countries to enhance compliance with output cuts.
(With inputs from Reuters)
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