Brent declines on rising US oil stockpiles
The front-month ICE Brent contract has moved $1.73/bbl lower on the day, to trade at $76.11/bbl at 09.00 GMT.
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Upward pressure:
Brent futures have gained support from expectations of strong winter fuel demand. Oil demand in January is expected to rise by 1.4 million b/d year-on-year to 101.4 million b/d, driven mainly by increased heating fuel consumption in the northern hemisphere, according to Reuters, citing JPMorgan analysts. They noted that colder-than-normal winter conditions, and an earlier start to travel in China for the Lunar New Year holidays, are boosting heating fuel usage.
Anticipations of stricter sanctions on Russian and Iranian oil firms have also lent support to oil prices. New sanctions are expected to take effect after US president-elect Donald Trump’s inauguration later this month.
“Concerns over Iranian and Russian oil flows will also be providing some support,” two analysts from ING Bank have said.
Market watchers are also worried about global supply tightening amid rising demand, further adding to Brent’s upward momentum.
Downward pressure:
Despite a drop in commercial US crude oil stocks, build-ups in gasoline and distillate stocks have exerted some downward pressure on Brent futures.
The latest data from the US Energy Information Administration (EIA) revealed an increase in gasoline and distillate stockpiles last week in the US. Gasoline inventories rose by 6.33 million bbls to 237 million bbls, while middle distillate stocks increased by 6.07 million bbls to 128 million bbls.
Oil prices declined “on the back of a bearish weekly US oil stockpiles report,” said Vandana Hari, founder and analyst at VANDA Insights.
By Tuhin Roy
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