Brent gains after sharp draw in US crude stocks

The front-month ICE Brent contract has gained by $1.14/bbl on the day, to trade at $105.24/bbl at 09.00 GMT.

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Upward pressure:

Brent crude’s price has felt some upward pressure after the US Energy Information Administration (EIA) reported a sharp draw in US commercial crude oil stocks.

Commercial US crude oil inventories decreased by around 8.6 million bbls to 415.6 million bbls in the week ending 9 October, according to data from the EIA.

The EIA data marks “the largest weekly decline since February,” two analysts from ING Bank said. A draw in US crude stocks typically indicates stronger demand for oil and can support Brent’s price.

Uncertainty in the Middle East and concerns over oil flows through the Strait of Hormuz have led the global oil market to price in a “significant risk premium”, according to ING Bank’s analysts.

The analysts added that some kind of agreement between the US and Iran would be needed for that premium to be fully removed.

Downward pressure:

Brent’s gains have been capped after members of the International Energy Agency (IEA) agreed to accelerate the release of oil from emergency stockpiles.

IEA members have collectively released about 330 million bbls of crude oil and petroleum products from strategic reserves so far.

The release accounts for the bulk of the 400 million-bbl stock draw pledged by the 32-member countries earlier this year.

By Aparupa Mazumder

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