Oil prices rose due to declining U.S. fuel inventories and heightened tensions in the Middle East. Brent crude increased by 0.57%, while WTI gained 0.51%. A larger than expected drawdown in distillate inventories was observed, alongside rising geopolitical risks. Meanwhile, potential discussions for a ceasefire in Ukraine may affect oil supply dynamics.
Oil prices experienced an increase during early trading on Thursday, attributed to a fall in U.S. fuel inventories and escalating tensions in the Middle East. Brent crude futures rose by 40 cents, or 0.57%, reaching $71.18 per barrel, while U.S. West Texas Intermediate (WTI) crude increased by 34 cents, or 0.51%, to $67.50.
This rise in oil prices followed U.S. government data indicating a larger-than-anticipated drawdown in distillate inventories. Specifically, distillate stocks, which encompass diesel and heating oil, decreased by 2.8 million barrels last week, significantly surpassing the expected decrease of 300,000 barrels indicated in a Reuters poll. In contrast, U.S. crude inventories saw an increase of 1.7 million barrels, exceeding the anticipated rise of 512,000 barrels.
Global risk premiums intensified following Israel’s initiation of a ground operation in Gaza, which broke a ceasefire lasting nearly two months. Concurrently, the U.S. has been conducting airstrikes on Houthi positions in Yemen in retaliation for attacks on vessels in the Red Sea. Former President Trump pledged to hold Iran accountable for any further Houthi assaults.
In discussions regarding the conflict between Ukraine and Russia, Ukrainian President Volodymyr Zelenskiy noted the possibility of quickly establishing a halt on strikes targeting energy facilities. This statement suggests that both sides may be progressing towards a potential ceasefire, which could lead to eased sanctions and a revival of Russian oil supplies in the market.
Trump’s Middle East envoy, Steve Witkoff, announced that further discussions between Russian and U.S. officials aimed at ceasing hostilities are scheduled to occur in Saudi Arabia on Sunday. In the Americas, Chevron’s CEO has requested a 60-day extension from the Trump administration to conclude operations in Venezuela, as reported by the Wall Street Journal. Venezuela’s state-owned oil company, PDVSA, is reportedly planning to continue oil exports from its joint venture with Chevron, as indicated by Reuters.
In summary, recent developments have led to an increase in oil prices driven by U.S. inventory data and rising geopolitical tensions. The drawdown in distillate inventories and ongoing conflicts in the Middle East underscore global market volatility. Meanwhile, discussions between the U.S. and Russia may pave the way for a ceasefire in Ukraine, and Chevron’s operations in Venezuela remain a point of focus amid these changes.
Original Source: www.cnbc.com
