Brent gains after EIA reports a surprise draw in crude stocks
The front-month ICE Brent contract gained $2.26/bbl on the day, to trade at $84.29/bbl at 09.00 GMT.
PHOTO: An oil refinery behind a pumpjack. Getty Images
Upward pressure:
Brent futures surged after the US Energy Information Administration (EIA) reported an unexpected decline in US crude stocks.
Commercial crude oil inventories in the US dropped by 1.36 million bbls to 460 million bbls in the week ended 3 May. The stocks dropped amid higher US crude oil exports and increased refinery utilisation.
Brent’s price gained “after a fall in US inventories signalled a tight physical market,” ANZ Bank’s senior commodity strategist Daniel Hynes said. The drop in inventories was “against expectations,” he added.
In the Middle East, talks about a potential ceasefire agreement between Israel and Hamas came to a halt after Israel rejected Hamas’ latest truce proposal this week.
“The Gaza crisis continued to fester, with Israel poised to launch a ground offensive in Rafah, while its ceasefire negotiations with Hamas remained stuck in a difficult deadlock,” VANDA Insights’ founder and analyst Vandana Hari said.
Besides, Russian Deputy Prime Minister Alexander Novak has reiterated that there are no plans to increase oil output anytime soon.
Downward pressure:
A stronger US dollar has been “denting investors’ appetite” and putting downward pressure on dollar-denominated commodities like oil, Hynes said.
Additionally, ‘hawkish’ comments from the US Federal Reserve’s (Fed) officials are “raising doubts about a rate cut,” Hynes added.
The US central bank maintained interest rates at 5.25-5.50% at its latest policy meeting. It is expected to hold interest rates steady until it gains greater confidence about bringing the inflation level down in the country.
“We are fully committed to returning inflation to our 2 percent goal,” Fed chairman Jerome Powell said earlier.
By Aparupa Mazumder
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