Brent loses momentum following crude stocks build
The front-month ICE Brent contract has dropped by $0.90/bbl on the day, to trade at $61.14/bbl at 09.00 GMT.
IMAGE: Oil pumpjacks pictured at dusk. Getty Images
Upward pressure:
Brent crude has found some support following remarks by US President Donald Trump, which heightened geopolitical risk premiums overnight.
After a meeting with Israeli counterpart Benjamin Netanyahu, Trump said the US had struck a dock along Venezuela’s coast that he claimed was used by vessels involved in drug trafficking, according to media reports.
Trump further added that the US could launch strikes on Iran if the Islamic Republic resumed producing nuclear weapons.
“I've been reading that they're building up weapons and other things, and if they are, they're not using the sites we obliterated, but possibly different sites,” Reuters quoted Trump as saying.
Elsewhere, Saudi Arabia-led forces struck the southern Yemeni port of Mukalla yesterday, Reuters reported. The airstrike targeted a UAE-linked weapons shipment, marking a significant escalation between the two OPEC producers.
Oil market participants are “stuck weighing geopolitical risk from Venezuela, Russia, and Yemen,” SPI Asset Management managing partner Stephen Innes remarked.
Downward pressure:
Brent’s price has come under downward pressure after the American Petroleum Institute (API) reported a surge in US crude stocks.
US crude oil inventories increased by 1.7 million bbls in the week ending 26 December, according to the API estimates.
Earlier this week, the US Energy Information Administration (EIA) reported a 400,000 bbls increase in US crude stocks, to around 425 million bbls for the week ending 19 December.
A rise in US crude stocks can indicate lower demand for oil and can put some downward pressure Brent's price.
Brent’s price gains were “erased by sizable inventory builds,” Innes said. “For now, barrels matter more than headlines,” he added.
The EIA will put out this week’s official figures later today.
By Aparupa Mazumder
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