Concerns over supply following a significant decline in U.S. stocks cause oil prices to increase by 2%

18 Oct 2023 , 09:41 AM

Early on Wednesday, oil prices increased by roughly $2 as industry data revealed a larger-than-anticipated draw in U.S. crude reserves amid concerns over Middle Eastern supply disruptions brought on by the escalating Israel-Hamas conflict.

Brent crude futures increased $1.62, or 1.8%, to $91.49 a barrel as markets prepared for Chinese GDP data. The price of a barrel of West Texas Intermediate crude (WTI) futures increased $1.77, or 2%, to $88.43.

According to market sources citing American Petroleum Institute data on Tuesday, U.S. crude stocks decreased by around 4.4 million barrels in the week ending October 13. That was substantially steeper than the analysts’ predicted 300,000 barrel draw.

Later on Wednesday, the U.S. government must release official figures.

After over 500 Palestinians were killed in an explosion at a hospital in Gaza City on Tuesday, which Israeli and Palestinian officials each laid the blame for on the other, tensions in the Middle East grew.

On Wednesday, Vice President Joe Biden will travel to Israel to support that nation in its conflict with Hamas, a branch of the Palestinian Islamic Jihad. He will make it clear that he does not want the crisis to worsen, according to the White House.

Due to consistently poor demand, data due out on Wednesday are expected to reveal that China’s economy slowed down in the third quarter. However, greater stimulus has enhanced Beijing’s chances of meeting its full-year growth target.

Meanwhile, the Federal Reserve is anticipated to raise interest rates once more before year’s end as September retail sales in the United States exceeded estimates. Inflation-controlling interest rate increases may limit economic expansion and lower energy consumption.

On Tuesday, the Venezuelan government and its political opposition agreed on electoral assurances for the 2024 presidential elections, opening the door for potential sanctions relief from the United States that would increase oil supplies.

Since 2019, the United States has imposed sanctions on Venezuelan oil exports. While the lifting of the sanctions is anticipated to enhance oil supply and flow, analysts anticipate that any rises from the nation would be gradual due to a lack of investment.

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