Oil Prices Rise Slightly Amid U.S. Reserve Support

by Alice
Crude Oil1

Oil prices saw a modest increase on Tuesday after a significant drop of 6% the previous day. A U.S. plan to purchase oil for the Strategic Petroleum Reserve (SPR) offered some support, despite ongoing concerns about weaker future demand growth.

Current Price Movements

As of 0847 GMT, Brent crude futures climbed by 63 cents, or 0.88%, reaching $72.05 a barrel. Meanwhile, U.S. West Texas Intermediate (WTI) crude rose by 58 cents, or 0.86%, to $67.37 a barrel.

On Monday, both Brent and WTI contracts fell to their lowest levels since October 1, following Israel’s retaliatory strike against Iran, which did not target Tehran’s oil infrastructure. With indications that neither nation is likely to escalate the conflict further, investor worries about sluggish global oil demand growth have come to the forefront.

Analyst Insights

John Evans, an analyst at oil broker PVM, stated, “Unless there is another Iranian response to the counterattack, we will likely see Israel limit its operations to proxies rather than Iran itself in the lead-up to the U.S. election next week.”

Despite the slight price recovery, tensions in the Middle East remain elevated. Iranian Foreign Ministry spokesperson Esmaeil Baghaei warned that Iran would “use all available tools” to respond to Israel’s recent actions. Additionally, the U.S. has cautioned Iran at the United Nations Security Council about “severe consequences” for any further aggressive actions against Israel or U.S. personnel in the region.

U.S. Reserve Purchases

The U.S. government announced its intention to acquire up to 3 million barrels of oil for the SPR, with delivery scheduled through May of next year. This purchase could limit the government’s ability to buy more oil until lawmakers approve additional funding. According to Evans, the U.S. announcement introduces a significant buyer in a market that currently lacks demand.

Hiroyuki Kikukawa, president of NS Trading, a unit of Nissan Securities, predicted a downward trend for prices ahead, noting that the peak winter kerosene demand season in the Northern Hemisphere is still some time away. He also highlighted sluggish demand in China as a contributing factor.

Inventory Expectations

A preliminary Reuters poll indicated that crude oil and gasoline stockpiles in the U.S. likely increased last week, while distillate inventories are expected to have declined. The American Petroleum Institute (API) is set to release its weekly report on Tuesday, followed by the Energy Information Administration (EIA), which will publish its report on Wednesday.

Related topics:

You may also like

FinancialFocusHub.com is your gateway to insightful financial guidance and strategies. Explore expert advice on investing, saving, and managing wealth. Stay informed with the latest trends and tools to empower your financial journey.

TAGS

Copyright © 2024 Financialfocushub.com