Brent rises as geopolitical risks return to focus

The front-month ICE Brent contract has increased by $0.49/bbl on the day, to trade at $62.04/bbl at 09.00 GMT.

IMAGE: Crude oil storage tanks. Getty Images

Upward pressure:

Brent crude’s price has moved higher as geopolitical risks have resurfaced, renewing concerns over supply disruptions.

Russia has accused Ukraine of carrying out a drone attack on President Vladimir Putin’s residence, according to Reuters.

The development has added a fresh layer of uncertainty for market participants, who are already struggling to assess the outlook for the US-mediated peace talks.

“Oil tried to inject a bit of geopolitics into the mix, lifting on chatter around strained peace talks and headlines aimed at palaces and presidents,” SPI Asset Management managing partner Stephen Innes remarked.

Downward pressure:

Brent crude has come under some downward pressure after the US Energy Information Administration (EIA) reported a small rise in US crude stocks.

Commercial US crude oil inventories increased by 400,000 bbls to around 425 million bbls in the week ending 19 December, according to data from the EIA.

A build in US crude stocks typically indicates lower demand for oil and can put downward pressure on Brent's price.

Also weighing on Brent’s price, the total number of rigs drilling for crude oil and natural gas in the US rose by three to 545 units last week, according to Baker Hughes.

The US oil rig count is seen as an indicator of future oil production. It reflects how much oil drilling activity is happening or expected to happen in the shale sector.

By Aparupa Mazumder

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