Brent Crude Oil Futures Rise Amid Supply Concerns
Brent crude oil futures experienced a slight increase of 6 cents, or 0.1%, reaching $78.39 per barrel on Thursday. This uptick marks the third consecutive session of price growth, driven largely by market anxieties surrounding potential supply disruptions linked to escalating tensions in the Middle East. Additionally, a significant reduction in crude oil inventories in the U.S. has contributed to a rebound from several months of price lows, as reported by Reuters.
Meanwhile, West Texas Intermediate (WTI) crude futures climbed by 16 cents, or 0.2%, settling at $75.39 per barrel. Both benchmarks have recovered from earlier lows encountered earlier in the week, which were influenced by fears of an impending recession in the U.S. and a downturn in global markets.
Tensions in the Middle East Heighten Market Anxiety
The potential for supply disruptions due to Middle Eastern conflicts has alarmed traders. Recent high-profile assassinations of members from the Hamas and Hezbollah groups have heightened the likelihood of retaliatory actions from Iran against Israel. Analysts suggest that the market is on high alert, anticipating a response from Tehran. A strong reaction could escalate into a broader conflict in the region, jeopardizing oil supply chains. Furthermore, the situation is exacerbated by ongoing issues with oil production in Libya, as highlighted by ANZ Research analysts.
Production Challenges in Libya
The National Oil Corporation of Libya declared a force majeure at its Sharara oil field on Tuesday, citing the need to progressively reduce output due to domestic protests. Despite the rising tensions in the Middle East, oil supplies have not yet been directly impacted. However, attacks on vessels in the Red Sea have compelled tankers to take longer routes, resulting in crude oil being held in water for extended periods.
U.S. Crude Oil Inventories Show Significant Decline
Recent data indicated a substantial decline in U.S. crude oil inventories, which is noteworthy as the U.S. is the world’s largest consumer of oil. Stocks dropped by 3.7 million barrels, significantly surpassing analysts’ predictions of a 700,000-barrel decrease. This decline also marks the sixth consecutive weekly drop, bringing inventories to a six-month low.
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Stable Demand for Physical Barrels Despite Economic Concerns
Observers from ANZ suggest that the demand for physical barrels remains steady, even in light of worries regarding weak economic activity.
Possible Price Increase for Brent Crude
Meanwhile, analysts from Citi indicate that Brent crude prices may rise again, potentially reaching the lower to mid-range levels of $80.
Market Update
The data reflects the situation as of 9:00 AM Bulgarian time.
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