Brent gains as US crude stocks decline
The front-month ICE Brent contract has gained by $0.95/bbl on the day, to trade at $68.03/bbl at 09.00 GMT.
IMAGE: Oil storage tanks. Getty Images
Upward pressure:
Brent crude’s price has moved higher after the American Petroleum Institute (API) reported a drop in US crude stocks.
US crude oil inventories dropped by 3.42 million bbls in the week ending 12 September, according to API estimates cited by Trading Economics.
The API data was “in contrast to the average market expectations of a build of 1.07m barrels [1.07 million bbls],” remarked two analysts from ING Bank.
A drop in US crude stocks typically indicates higher demand in the world’s largest oil-consuming nation and can lend support to oil prices.
Geopolitical flare-ups have also continued to support Brent today. Overnight, Israel launched an attack on Yemen’s port city of Hodeida, the Associated Press (AP) reported.
The strike “threatens to escalate the conflict in the region and endanger crude oil supplies,” ANZ Bank’s senior commodity strategist Daniel Hynes said.
Downward pressure:
A sharp rise in Brent’s price has been capped as the market shifts its focus to the US Federal Reserve’s (Fed) meeting, which concludes later today.
The meeting is seen as highly pivotal, with the US central bank expected to decide whether to maintain current interest rates or implement a cut, according to market analysts.
Higher interest rates in the US can dampen demand growth and make dollar-denominated commodities like oil more expensive for holders of other currencies.
By Aparupa Mazumder
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