Brent sheds after surprise US crude stock build
The front-month ICE Brent contract shed $0.16/bbl on the day, to trade at $77.29/bbl at 09.00 GMT.
PHOTO: Black drum barrels of crude oil and the US flag on a world map. Getty Images
Upward pressure:
The escalating agitations in the Middle East have supported Brent’s prices this week. On Tuesday, Iran-aligned Houthi militants launched one of its largest drone and missile attacks on commercial vessels in the Red Sea.
Following the strikes, the naval ships deployed in the region by the US and UK jointly took down 21 missiles and drones launched by the Yemeni militant group, US Central Command (CENTCOM) said.
The UK’s defence secretary Grant Shapps highlighted that the latest Houthi attack marked the most extensive assault in the Red Sea thus far, as the ongoing Israel-Hamas conflict extended its impact outside the Gaza Strip, Reuters reported.
The timing of the recent attack by Houthis, just days after the US and 12 other nations issued a warning to the group to cease their attacks in the Red Sea, underscores the escalating tensions in the region.
“Concerns regarding a broader escalation in the Middle East are expected to support the oil market,” SPI Asset Management’s managing partner Stephen Innes said.
Downward pressure:
Brent futures slightly declined after the US Energy Information Administration (EIA) reported a surprise build in US crude oil stocks. According to the EIA data, commercial US crude inventories rose by 1.34 million bbls on the week, to 432.40 million bbls on 5 January.
The consecutive increase in the US distillate stocks, which include diesel and gasoil, for the seventh week, along with the second straight week gain in gasoline stocks, signals weaker demand in the world’s largest oil-consuming country.
Brent futures faced a “notable selling pressure as the Energy Information Administration (EIA) reported substantial builds in U.S. crude and refined fuel stockpiles during the first week of 2024,” Innes added.
This weekly crude stock build ran counter to the American Petroleum Institute's (API) projection of a 5.2 million-bbl draw.
By Aparupa Mazumder
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