Brent moves higher following US crude stocks draw
The front-month ICE Brent contract has gained $1.78/bbl on the day, to trade at $81.82/bbl at 09.00 GMT.
PHOTO: Oil pump jacks at dusk. Getty Images
Upward pressure:
The Brent crude price has moved higher as oil demand growth in the world’s largest consumer got a cheer following a decline in weekly US crude stocks.
Commercial US crude oil inventories declined by 1.96 million bbls to touch 412 million bbls for the week ending 10 January, according to data from the US Energy Information Administration (EIA).
“The US Energy Information Administration’s data for the week ended January 10 also lent some support to crude on Wednesday, showing the eighth consecutive drop in commercial crude stockpiles, to 33-month lows,” VANDA Insights’ founder and analyst Vandana Hari remarked.
Besides, oil reacted positively to the “relatively soft” US inflation data, which has opened the window for interest rate cuts by the US Federal Reserve (Fed) this year, as it tries to bring inflation under its 2% target.
The change in the US inflation rate, based on the Consumer Price Index (CPI), rose by 0.4% in December, edging up from the 0.3% increase recorded in the previous month.
“The US CPI data came in somewhat better than anticipated, registering a modest relief in inflation pressures, with a core print slightly below expectations,” SPI Asset Management managing partner Stephen Innes said.
Downward pressure:
Brent felt some downward pressure as Israeli Prime Minister Benjamin Netanyahu’s war cabinet and the Iran-backed Hamas armed group reportedly reached a six-week initial ceasefire deal.
It will start with the gradual withdrawal of the Israeli army from the Gaza Strip, in exchange for Hamas releasing the Israeli civilians it took hostage on 7 October 2023, according to media reports.
The news has removed some risk appetite from the oil market, as it eased concerns about the possibility of a full-scale war between Israel and Iran, one of the largest OPEC+ oil producers, according to market analysts.
By Aparupa Mazumder
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