Oil prices rose due to a decline in U.S. distillate inventories and escalated Middle Eastern tensions, including Israeli military action and U.S. airstrikes in Yemen. Brent crude increased by 0.57% and WTI by 0.51%. U.S. crude inventories rose contrary to expectations, highlighting the volatility in the oil market. Discussions regarding geopolitical stability continue, impacting future supply forecasts.
Oil prices experienced an increase in early trading on Thursday, driven by a notable decline in U.S. fuel inventories and escalating tensions within the Middle East. Brent crude futures noted a rise of 40 cents, or 0.57%, reaching $71.18 per barrel by 0213 GMT, while U.S. West Texas Intermediate crude (WTI) saw an increase of 34 cents, or 0.51%, achieving a price of $67.50.
This uptick in oil prices followed the release of U.S. government data indicating a substantial drawdown in distillate inventories for the previous week that exceeded expectations. Specifically, distillate inventories, which encompass diesel and heating oil, declined by 2.8 million barrels, contrasting sharply with a predicted drop of only 300,000 barrels based on a Reuters poll. In contrast, U.S. crude inventories noted a rise of 1.7 million barrels, surpassing the expected increase of 512,000 barrels.
Global risk premiums have also escalated prompted by recent military actions. Israel initiated a new ground operation in Gaza, violating a two-month ceasefire. Furthermore, the U.S. continued its airstrikes against Houthi targets in Yemen, responding to the group’s attacks on maritime vessels in the Red Sea. Former President Trump has expressed intentions to hold Iran accountable for any future Houthi provocations.
In developments in Ukraine, President Volodymyr Zelenskiy indicated that an agreement to cease strikes on energy facilities in the ongoing war with Russia could be quickly reached, signaling potential moves toward a ceasefire that may facilitate the relaxation of sanctions and the reintroduction of Russian oil supplies to the market.
Steve Witkoff, a special envoy for the Middle East, revealed that discussions between Russian and U.S. officials aimed at halting the conflict are scheduled for Sunday in Saudi Arabia. In the Americas, Chevron’s CEO has reportedly requested a 60-day extension from the Trump administration to conclude operations in Venezuela, extending beyond the previously set deadline of April 1. Venezuela’s state-run oil company, PDVSA, is preparing to continue oil exports through its joint venture with Chevron, as reported by Reuters.
In conclusion, rising oil prices are attributed to a significant decrease in U.S. distillate inventories coupled with increasing geopolitical tensions in the Middle East. The data suggests a complex interplay between regional conflicts, U.S. foreign policy, and global oil supply dynamics. As discussions continue to take place regarding the situation in Ukraine and actions in Venezuela, the energy market remains in a state of flux, influenced by a myriad of factors.
Original Source: www.cnbc.com
