Brent dips further on US crude inventory build

The front-month ICE Brent contract has declined by $0.42/bbl on the day, to trade at $77.21/bbl at 09.00 GMT.

PHOTO: An oil barrel with a downward arrow indicating Brent's price decline. Getty Images

Upward pressure:

Brent crude’s price felt some upward pressure from elevated tensions in the Middle East. Oil market analysts remain concerned about potential Israeli retaliation on Iran, which could disrupt oil production in the Middle East region.

“The latest reports indicate that Iran is prepared to launch thousands of missiles at Israel and target economic sites if its attacked,” ANZ Bank’s senior commodity strategist Daniel Hynes remarked.

Although US President Joe Biden, in a recent press brief, discouraged the Israel Defense Forces (IDF) from targeting Tehran’s oil facilities, “there is growing concern that Israel’s allies [like the US] have little influence on its strategy,” Hynes said.

Oil prices also found support as Hurricane Milton made landfall on Florida’s west coast, with major US oil companies including Chevron and Kinder Morgan closing fuel-importing terminals at the port of Tampa, Reuters reported.

“[Oil] prices recovered some of the losses this morning amid uncertainty in the Middle East and concerns over supply disruptions due to Hurricane Milton,” two analysts from ING Bank said.

Downward pressure:

Brent’s price trailed lower after the US Energy Information Administration (EIA) reported a build in US crude stocks, sparking demand growth concerns.

Commercial crude oil inventories in the US increased by 5.81 million bbls to touch 423 million bbls on 4 October, according to data from EIA.

An increase in US crude stocks indicates lacklustre oil demand growth, which can put downward pressure on Brent’s price. “The Energy Information Administration’s (EIA) inventory report was bearish for the oil market yesterday,” ING Bank’s analysts said.

However, the weekly US crude stock build was much smaller compared to the 10.9 million bbls build predicted by the American Petroleum Institute (API).

Meanwhile, China’s National Development and Reforms Commission (NDRC), in a recent press conference, failed to announce any new supportive measures for the country’s economic growth.

This news coming from the world’s second-largest crude oil consumer has put further downward pressure on Brent. “[Brent] crude oil prices were under pressure… as the disappointment over a lack of new stimulus measures in China weighed on sentiment,” Hynes added.

By Aparupa Mazumder

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