US Stock Drain Pushes Oil Forward After Steady Gain

10 Jan 2024 , 08:44 AM

Wednesday saw a slight increase in oil prices, continuing the day’s upward trend, as industry data revealed that U.S. crude stocks decreased more than anticipated last week, however gains were limited by a larger-than-expected build in product inventories.

U.S. West Texas Intermediate crude futures increased by 29 cents, or 0.4%, to $72.53 a barrel, while Brent crude futures increased by 29 cents, or 0.4%, to $77.88 a barrel.

Tuesday’s gains in the benchmarks were around 2% due to the Middle East situation and a supply disruption in Libya.

According to market sources citing American Petroleum Institute numbers on Tuesday, U.S. crude oil stocks decreased by 5.2 million barrels in the week that ended on January 5. This is in contrast to experts’ predictions, which increased by 700,000 barrels in a Reuters poll.

In contrast, distillate inventories increased by 6.9 million barrels, above estimates of 2.5 million and 2.4 million barrels, respectively, while gasoline inventories increased by 4.9 million barrels.

The U.S. Department of Energy’s statistical branch, the EIA, is set to submit its figures on Wednesday at 10:30 a.m. EST (1530 GMT).

The EIA predicted on Tuesday that while U.S. petroleum production will reach records over the next two years, it will expand more slowly due to efficiency improvements offsetting a drop in rig activity.

U.S. Secretary of State Antony Blinken made a fresh plea to Israel on Tuesday to make ‘hard choices’ in order to normalize relations with more of its neighbours in the Middle East, paving the way for the establishment of a Palestinian state.

Investors are also searching for signs that point to a potential date for interest rate cuts by the Federal Reserve. There is now less expectation that the US central bank will start reducing interest rates in March.

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