Noor Trends News, Technical Analysis, Educational Tools and Recommendations
Amidst mounting tensions in the Middle East and an unexpected surge in US crude oil inventories, oil prices held steady in early trading on Wednesday. Brent crude futures settled at $89.42 per barrel, while US West Texas Intermediate crude futures saw a marginal increase of two cents to $85.25.
The ongoing conflict in Gaza and ongoing ceasefire negotiations have sparked concerns about potential disruptions in oil supply. On Tuesday, Hamas expressed dissatisfaction with the Israeli ceasefire proposal, citing that it did not meet the conditions set by armed Palestinian factions. Despite this, Hamas is reviewing the proposal and plans to respond to mediators in due course. The continued hostilities raise the specter of involvement from other regional players, particularly Iran, a major supporter of Hamas and the third-largest producer in the Organization of the Petroleum Exporting Countries (OPEC).
Adding to the uncertainty, US crude oil inventories experienced a significant increase last week, rising by 3.03 million barrels, surpassing analysts’ expectations of a 2.4 million barrel increase. This preliminary data, sourced from market reports citing figures from the American Petroleum Institute, precedes the official US government inventory data scheduled for release at 10:30 am.
In another development, the US Energy Information Administration (EIA) revised its forecast for domestic crude oil production in 2024, projecting an increase of 280,000 barrels per day to 13.21 million barrels per day. This revision represents a slight uptick from previous estimates. Additionally, the EIA anticipates Brent crude oil prices to average $88.55 per barrel in 2024, up from the previous forecast of $87 per barrel.
During Tuesday’s trading session, both Brent and West Texas Intermediate crude prices dipped by more than 1% as ceasefire talks between Israel and Hamas persisted in Cairo. Meanwhile, Iran’s Revolutionary Guards’ naval forces commander issued a statement affirming the capability to close the Strait of Hormuz if necessary, a critical chokepoint through which approximately a fifth of global oil consumption passes daily.
In response to the Middle East situation, Turkey announced restrictions on the export of several products, including aviation fuel, to Israel until a ceasefire is achieved. Israel, in turn, signaled its intent to implement reciprocal measures.
Given the oil market’s sensitivity to geopolitical developments and supply fluctuations, traders are closely monitoring the situation for any further developments that may impact oil flow and prices.
