Brent loses momentum following crude stock build
The front-month ICE Brent contract has declined by $2.08/bbl on the day, to trade at $64.12/bbl at 09.00 GMT.
IMAGE: Getty Images
Upward pressure:
Brent has found support as supply concerns in the Middle East resurfaced after a CNN report stated that Israel was preparing for a major airstrike on Iranian nuclear facilities.
The risk of a wider conflict in the Middle East could affect oil supplies from other regional producers.
“Crude oil rallied in early trading amid heightened geopolitical risk,” ANZ Bank’s senior commodity strategist Daniel Hynes noted.
The news has raised concerns that negotiations between the US and Iran over Tehran's nuclear program may falter, according to market analysts.
“While the likelihood of a strike appears low, it has snapped the market out of a calm that developed as some hostilities in the region appeared to cool slightly,” Hynes said.
Downward pressure:
Brent’s price has declined after the US Energy Information Administration (EIA) reported a surprise gain in US crude stocks.
Commercial US crude oil inventories increased by 1.3 million bbls to touch 443 million bbls for the week ending 16 May, according to data from the EIA.
The build in crude stocks was “was much higher than expected,” Hynes said. A buildup in inventories typically signals weaker oil demand, which can put downward pressure on Brent's price.
By Aparupa Mazumder
Please get in touch with comments or additional info to news@engine.online
