Brent gains as some demand concerns ease

The front-month ICE Brent contract has gained $0.91/bbl on the day, to trade at $72.65/bbl at 09.00 GMT.

IMAGE: Oil barrels. Getty Images

Upward pressure:

Brent crude’s price moved higher after the US Energy Information Administration (EIA) reported a draw in US crude stocks. Commercial crude oil inventories in the country dropped by 515,000 bbls to touch 426 million bbls for the week ending 25 October, the EIA reported.

A drop in US crude stocks indicates growth in oil demand, which can put upward pressure on Brent’s price. Sentiment in the crude oil market was supported by an “expected drawdown in US inventories,” ANZ Bank’s senior commodity strategist Daniel Hynes remarked.

On the supply front, attention is likely to shift back to OPEC, which is scheduled to gradually unwind output cuts from December. Brent could get a boost as oil market analysts expect the Saudi Arabia-led group to maintain crude oil production levels and put a floor under oil.

“The focus remains on the OPEC+ production numbers and outlook and the group’s response to recent price weakness,” two analysts from ING Bank said.

Downward pressure:

Brent gains have been capped marginally amid ongoing negotiations over a ceasefire deal for the Gaza Strip. Israeli Prime Minister Benjamin Netanyahu has revealed plans to resolve the conflict in Lebanon, according to media reports.

“The plan, if agreed, would lead to a 60-day suspension of [Israel-Lebanon] hostilities while mediators craft a lasting peace deal to remove Hezbollah from the border region and bolster US peacekeepers there,” Hynes said.

Meanwhile, the market has regained confidence from Iran’s delayed response to Israel’s latest round of airstrikes. The news has eased some supply-related concerns and put downward pressure on Brent.

By Aparupa Mazumder

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