Brent gains as supply concerns outweigh weak demand projections

The front-month ICE Brent contract gained $1.37/bbl on the day, to trade at $86.57/bbl at 09.00 GMT.

PHOTO: Getty Images

Upward pressure:

Escalating tensions in the Middle East continue to support Brent price gains. The failure of a ceasefire agreement between Israel and Hamas has again raised concerns about possible oil flow disruptions in the region.

“The lack of a ceasefire deal between Israel and Hamas continues to keep tensions in the Middle East elevated,” ANZ Bank’s senior commodity strategist Daniel Hynes stated.

The oil market is eagerly awaiting the outcomes of the upcoming OPEC+ Joint Monitoring Ministerial Committee (JMMC) meeting scheduled for next week, where discussions on extending supply cuts for the remainder of the year are on the agenda.

“Supply side issues also remain in focus ahead of a meeting by the OPEC Joint Monitoring Ministerial Committee next week,” Hynes further remarked.

Downward pressure:

US commercial crude oil inventories rose by 3.17 million bbls to 448 million for the week ending 22 March, according to US Energy Information Administration (EIA) data released yesterday. The stock build was much smaller than the 9.3 million bbls build predicted by the American Petroleum Institute (API).

The gasoline stocks also rose by 1.30 million bbls to 232 million bbls, signalling lower demand in the US.

“A shocking build in crude supply might be a bit hard to shake off,” Price Futures Group’s senior market analyst Phil Flynn commented.

“Oil [Brent] traded under pressure… as a report from the American Petroleum Institute showed a substantial build in US inventories, against the market expectations for a drawdown," stated two analysts from ING Bank.

By Tuhin Roy

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