Oil prices increased on Wednesday due to data indicating a rise in US crude oil inventories, and rising geopolitical conflicts in the world, while the Organization of Petroleum Exporting Countries’ (OPEC) prediction of stronger production and weaker demand limited further price increases.
International benchmark Brent crude rose 0.7% to $81.25 per barrel at 10.44 a.m. local time (0744 GMT), down from the previous session’s close of $80.69.
US benchmark West Texas Intermediate (WTI) increased 0.7% to $78.92 per barrel, after closing at $78.35 in the prior session.
Both benchmarks rose after data released late Tuesday by the American Petroleum Institute (API) showed a 5,20 million barrel decrease in US crude oil inventories, against the market prediction of a 2 million barrel draw.
The fall in US commercial crude oil reserves supported upward price movements by reflecting market perceptions of strengthening domestic demand.
Official figures from the Energy Information Administration (EIA) are expected to be released later in the day. If a fall in crude oil inventories is confirmed, prices are likely to climb further.
Moreover, ongoing global geopolitical conflicts, continue to influence upward price movements by fueling market players’ supply fears.
The United States Central Command (CENTCOM) said Tuesday that it destroyed two Houthi vessels in the Red Sea, noting they presented a ‘clear and imminent threat’ to US and coalition forces in the region.
‘This reckless and dangerous behavior by Iranian-backed Houthis continues to threaten regional stability and security,’ CENTCOM wrote on X.
In solidarity with the Gaza Strip, which has been under an Israeli onslaught since last October, Yemen’s Houthi group has been targeting Israeli-linked cargo ships in the Red Sea and the Gulf of Aden.
The conflict in the Red Sea, one of the world’s most frequently used sea routes for oil and fuel shipments, lent support to upward price movements by fueling concerns that rising tensions in the region might disrupt the global oil supply.
The escalation conflict between Ukraine and Russia is also contributing to the rise of crude prices by supporting supply concerns.
Ukrainian President Volodymyr Zelenskyy said on Tuesday that his country’s forces continue to advance in Russia’s border legion of Kursk, where Kyiv has carried out incursions since last week.
“I am constantly in touch with Commander-in-Chief Oleksandr Syrskyi, receiving reports on the frontline situation and our operations in the Kursk region. Despite the difficult and intense battles, our forces continue to advance in the Kursk region, and our state’s ‘exchange fund’ is growing,” Zelenskyy said on X.
On the other hand, OPEC’s latest monthly report forecasting a 185,000 barrels per day (bpd) rise in the organization’s crude output for July supported concerns over potential oversupply by limiting upward price movements.
Meanwhile, the organization’s global oil demand growth forecast for 2024 is revised down by 135,000 bpd, from the previous month’s assessment, and that also supported lower prices.
