Oil prices settle near 2-month highs amid geopolitical tensions, inventory expectations
Date
6/26/2024 8:18:17 AM
(MENAFN) On Wednesday, oil prices maintained stability near their highest levels in nearly two months, buoyed by ongoing geopolitical uncertainties in the Middle East and optimistic forecasts of inventory drawdowns in the third quarter. Market dynamics were influenced by reports from the American petroleum Institute, which indicated a slight increase of 914 thousand barrels in crude oil inventories in the United States on Tuesday. However, analysts anticipate that official data, scheduled for release today, will show a decline of approximately three million barrels, contributing to market sentiment.
Tamas Varga from BVM, an oil brokerage firm, highlighted the prevailing expectation of increased demand during the summer months, underscoring geopolitical factors as pivotal drivers of market movements. This sentiment was reflected in the morning trading session, where Brent crude futures edged up seven cents to USD85.08 per barrel by 08:13 GMT, while US West Texas Intermediate crude futures rose 23 cents to USD81.06 per barrel, marking a 0.3 percent increase.
Despite lingering concerns about global demand, particularly amidst economic uncertainties, market focus remains on potential inventory reductions during the peak demand season in the third quarter. Suvroo Sarkar, leading the energy sector team at DBS Bank, noted that the market is currently prioritizing inventory drawdown expectations over demand anxieties. Official US government data on oil and fuel inventories, crucial for market direction, is slated for release at 14:30 GMT today.
Analysts observe that the upward trajectory in front-month contract prices signals robust actual demand for crude, reinforcing price support in the near term. Notably, the prices for Brent and West Texas Intermediate crude contracts for August are approximately 80 cents per barrel higher than those for September, reflecting market confidence in sustained demand and potential supply constraints moving forward.
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