Oil prices rise as U.S. crude inventories suddenly fall, amid changing market dynamics
Date
4/24/2024 4:16:56 AM
(MENAFN) In early trading on Wednesday, oil prices extended their gains from the previous session, buoyed by industry data revealing a surprising drop in US crude inventories last week. This unexpected decline serves as an indication of heightened demand and a notable shift in market focus away from tensions in the Middle East. brent crude futures edged up by nine cents, reaching $88.51 a barrel, while US West Texas Intermediate crude futures rose by ten cents to $83.45 per barrel.
The American petroleum Institute's report highlighted a substantial decrease of 3.237 million barrels in US crude inventories for the week ending April 19, defying expectations of an 800,000-barrel increase, as projected by six analysts. Market participants are eagerly awaiting the release of official US data on oil and product inventories, scheduled for 10:30 a.m. US time (1430 GMT), to validate the significant inventory drawdown.
Amidst these developments, market sentiment is influenced by growing anticipation of potential interest rate cuts by both the UK and EU in June. Such monetary policy measures are viewed as potential catalysts to bolster economic growth, consequently stimulating demand for oil. Encouraging signs of economic expansion in the euro zone and the United Kingdom further support this narrative, with business activity in both regions accelerating at the fastest pace in nearly a year, according to analysis from Capital Economics.
Despite ongoing tensions in the Middle East, particularly regarding escalated strikes by Israel across Gaza, traders appear to be largely undeterred, as evidenced by their limited reaction to these developments in early trading on Wednesday. The intensified airstrikes, described by residents as some of the heaviest in weeks, have not substantially altered market dynamics, underscoring the resilience of oil prices amidst geopolitical uncertainties.
Overall, the unexpected decline in US crude inventories, coupled with favorable economic indicators and prospects of monetary stimulus measures, contribute to a positive outlook for oil prices in the near term. However, market participants remain vigilant of evolving geopolitical tensions and their potential to disrupt supply dynamics, highlighting the delicate balance between supply-side fundamentals and macroeconomic factors influencing oil markets.
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