Brent inches up amid declining crude stocks and growing geopolitical tensions

The front-month ICE Brent contract gained $0.08/bbl on the day, to trade at $88.22/bbl at 09.00 GMT.

PHOTO: An oil pumpjack with a refinery in the background. Getty Images

Upward pressure:

Brent futures inched higher after the US Energy Information Administration (EIA) reported a massive drop in crude stocks. Commercial crude oil inventories in the US dropped by 6.37 million bbls to 453.63 million bbls in the week ended 19 April, the EIA reported.

Tensions in the Middle East are expected to grow as Israel may soon launch further ground and air assaults on southern Gaza’s Rafah region, Reuters reported. This news has rekindled concerns about the spillover of the Middle Eastern conflict that could disrupt oil flows in the region, analysts said.

“An escalation in proxy conflicts could translate into increased shipping disruptions in the Red Sea, while a more direct conflict between these countries would likely result in large quantities of oil supply coming offline,” J. P. Morgan’s global market strategist Jack Manley said.

Downward pressure:

Despite the decline in US crude inventories, distillate stocks, which include diesel and gasoil, rose by 1.61 million bbls to 117 million bbls, the EIA reported.

Higher distillate stocks have sparked concerns about a slowdown in oil products demand and sluggish economic growth.

“A supportive 6.4m bbl [6.4 million bbls] stock drop reported by the EIA was offset by slowing end user demand for both gasoline and diesel,” Saxo Bank’s strategy team wrote in a client note.

By Aparupa Mazumder

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