Brent moves lower following US crude stocks build
The front-month ICE Brent contract has lost $0.96/bbl on the day, to trade at $74.74/bbl at 09.00 GMT.
PHOTO: Oil barrels. Getty Images
Upward pressure:
US President Donald Trump's stance on the Middle Eastern conflict was widely expected to be strict, with global markets bracing for extensive sanctions against one of the biggest oil producers of the region – Iran.
Brent’s price has drawn support from the recent bout of sanctions that Washington has placed on Iranian crude, with an aim to drive Tehran’s oil exports to zero.
Besides, oil prices reacted to Trump’s surprising statement on the US gaining complete control over the Gaza strip. “Oil traders are raising an eyebrow at Trump’s bold proclamation to take over Gaza and relocate Palestinians to neighbouring countries,” SPI Asset Management managing partner Stephen Innes remarked.
Trump said that he plans to completely transform the war-torn enclave into the “Riviera of the Middle East”, where more than 47,000 civilians have been displaced over the last 16 months due to the Israel-Hamas conflict.
“Markets are treating it with skepticism for now, but if there’s even a whisper of U.S. military deployment in the Middle East, expect the risk dial to shift dramatically,” Innes added.
Downward pressure:
Brent futures shed the previous day’s gains after the US Energy Information Administration reported a massive build in US crude stocks.
Commercial US crude oil inventories surged 8.7 million bbls higher to touch 423 million bbls for the week ending 31 January, according to data from the EIA.
“Crude oil benchmarks trade heavily near recent lows after a large build in US inventories reported yesterday,” analysts from Saxo Bank said.
The stock build came despite a one percentage point increase in US refinery utilisation, which reached 84.5%.
Earlier in the week, the American Petroleum Institute (API) also reported a sizeable build of about 5.02 million bbls in US crude inventories during the same time. A surge in US crude stocks can indicate a drop in oil demand, which can cap Brent's price rise.
“Crude oil fell amid signs of weaker demand in the US,” ANZ Bank’s senior commodity strategist Daniel Hynes said. US crude oil inventories are "now at their highest level since November 2024. The weekly build was also the largest in nearly a year,” he added.
By Aparupa Mazumder
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