(Bloomberg) — Oil edged higher as signs of lower US inventories and tensions in the Middle East outweighed expectations for more supply over 2024.
Most Read from Bloomberg
Global benchmark Brent inched toward $80 a barrel after easing on Tuesday, while West Texas Intermediate neared $75. The industry-funded American Petroleum Institute reported that nationwide US stockpiles declined by almost 7 million barrels last week, including a drop at the key hub at Cushing, Oklahoma. Official figures are due later on Wednesday.
In the Middle East, traders assessed the latest US-led strikes against Iran-backed Houthis in Yemen intended to halt attacks on vessels. Early Tuesday, Central Command hit two anti-ship missiles aimed into the Red Sea. Elsewhere, US forces made airstrikes on a Tehran-backed militia in Iraq.
Oil’s been confined to a narrow range in January, with the geopolitical risks countered by expectations that supplies from producers outside OPEC will continue to expand. Major crude trader Gunvor Group Ltd. said the opening half of the year would be dominated by output growth from outside the cartel that would eventually plateau, with markets set to remain rangebound.
“Oil markets are well supplied and that will likely continue,” said Vivek Dhar, mining and energy commodities analyst at Commonwealth Bank of Australia. While the Red Sea situation has increased costs, it’s unlikely to raise oil prices materially given supplies aren’t directly impacted, he said.
Additional support for crude came from Chinese authorities moving to support growth in the key oil importer. The People’s Bank of China will cut the reserve-requirement ratio by 0.5 percenage point early next month, Governor Pan Gongsheng told a briefing.
The US crude stockpiles print comes after nationwide inventories fell in three of the past four weeks, and amid disruptions caused by a blast of frigid weather. The freezing conditions crimped supplies from shale drillers in the Bakken basin, and also hampered refinery operations.
Brent’s prompt spread — the difference between its two nearest contracts — signaled tighter near-term conditions. The gap was 43 cents a barrel in backwardation, a bullish pattern, up from 3 cents at the start of the year.
To get Bloomberg’s Energy Daily newsletter into your inbox, click here.
Most Read from Bloomberg Businessweek
©2024 Bloomberg L.P.