Brent gains as API reports drop in US crude inventories
The front-month ICE Brent contract has inched $0.09/bbl higher on the day, to trade at $74.34/bbl at 09.00 GMT.
PHOTO: Oil barrels. Getty Images
Upward pressure:
Brent crude’s price moved higher after the American Petroleum Institute (API) reported that crude oil inventories in the US declined by 1.58 million bbls in the week that ended 11 October, according to the API estimates.
A drop in US crude stocks indicates a growth in oil demand, which can put upward pressure on Brent’s price. “A constructive report by the American Petroleum Institute (API) supports sentiments in the immediate term,” two analysts from ING Bank noted.
The Middle East conflict has also supported Brent’s price gains, following another Israeli airstrike on southern Lebanon on Wednesday, which killed 16 people including the mayor, Reuters reported.
The airstrike came “despite Lebanon saying it had received some form of guarantee from the US that Israel will ease its offense,” ANZ Bank’s senior commodity strategist Daniel Hynes remarked.
According to another CNN report, Israeli Prime Minister Benjamin Netanyahu’s cabinet has prepared a plan for a retaliatory strike on Iran, which could happen before the US election on 5 November.
“This [news] raised concerns that US influence over Israeli tactics remains weak, bringing into question the US calls for Israel not to target Iran’s oil facilities in any retaliatory attack,” Hynes said.
Downward pressure:
Concerns over demand growth from China have kept Brent's price gains in check. The country imported 11.07 million b/d of crude oil in September, down from 11.56 million b/d imported in August.
The drop in China's crude imports indicates a slowdown in oil demand growth in the world’s second-largest crude oil-consuming nation. “Crude oil remains rangebound as demand worries, especially in China, a country at the forefront of electrification,” analysts from Saxo Bank said.
Meanwhile, monthly oil market outlooks from oil producers’ group OPEC and energy agency IEA released this week indicated “sluggish [oil] demand” for the next year, ING Bank’s analysts said, keeping pressure on oil prices.
In its October market outlook, the Organisation of the Petroleum Exporting Countries (OPEC) lowered its global oil demand growth forecast to 1.9 million b/d, with total consumption expected to average 104.1 million b/d in 2024. This is about 106,000 b/d lower than its demand growth forecast made in September.
By Aparupa Mazumder
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