Brent gains following US crude stock draw

The front-month ICE Brent contract has gained $0.13/bbl on the day, to trade at $73.51/bbl at 09.00 GMT.

CONCEPT: Oil barrels and the world map. Getty Images

Upward pressure:

Brent crude’s price moved higher after the US Energy Information Administration (EIA) reported a 3.3 million-bbl draw in commercial US crude oil inventories, to touch 434 million bbls for the week ending 21 March.

A decline in crude oil stocks typically signals strong oil demand, which can put upward pressure on Brent’s price. “Crude oil prices gained amid signs of strong demand,” ANZ Bank’s senior commodity strategist Daniel Hynes said.

Additionally, US President Donald Trump has threatened to impose 25% tariffs on imports from countries buying Venezuelan oil and gas.

China, India, Spain, Italy and Cuba are among the largest consumers of Venezuelan oil, Reuters reports.

Brent’s price gains were “fueled by a double shot of bullish catalysts: a larger-than-expected drawdown in U.S. crude and fuel inventories and mounting geopolitical tension as the U.S. threatens to impose tariffs on countries importing Venezuelan crude,” SPI Asset Management managing partner Stephen Innes remarked.

Downward pressure:

Uncertainty over tariffs imposed by the Trump-led US administration has kept global financial markets on edge, with analysts fearing a slowdown in demand growth.

Trump has announced import taxes of 25% on cars and light trucks coming into the US. These taxes are set to come into force from next week.

“[The market’s] attention may soon pivot back to demand worries amid the US’ chaotic blitzkrieg of import tariffs against major trade partners,” VANDA Insights’ founder and analyst Vandana Hari said.

Sluggish crude oil demand could lead to lower prices, according to market analysts.

By Aparupa Mazumder

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