Brent sheds previous gains after bearish EIA weekly report
The front-month ICE Brent contract lost $1.06/bbl on the day, to trade at $78.12/bbl at 09.00 GMT.
PHOTO: An oil pump jack. Getty Images
Upward pressure:
Brent futures felt upward pressure this week driven by growing concerns of supply disruption in the Middle East.
On Thursday, Israel’s defence minister Yoav Gallant announced the country's latest strategy for the upcoming phase of its ground assault in the Gaza Strip, Reuters reported. The new strategy involves advancing towards the northern part of Gaza, alongside its ongoing efforts to weaken Iran-aligned Hamas militants in the southern part of Gaza.
Meanwhile, two explosives planted by the Islamic State (IS) near Iranian leader Qassem Soleimani’s tomb left about 100 civilians dead, Reuters reported. This event has further heightened the already escalating geopolitical tensions in the region.
“Iran is vowing revenge because of the bombing at the memorial service for General Soleimani that killed many people,” commented Price Futures Group’s senior market analyst Phil Flynn.
Downward pressure:
Brent futures shed the previous day’s gains following the huge build of gasoline and distillate stocks in the US.
The US Energy Information Administration (EIA) reported that US gasoline stocks jumped by 10.90 million bbls on the week, to 237 million bbls on 29 December, the highest since March 2023.
Similarly, distillate stocks, which include diesel and gasoil increased by 10.09 million bbls to 126 million bbls, the highest since January 2022. The rise in gasoline and distillate stocks indicates that demand for these fuels declined in the US last week.
“The [EIA] report was overwhelmingly bearish for refined products, indicating outsized builds across all three product categories due to exceptional demand weakness,” said SPI Asset Management’s managing partner Stephen Innes.
The gasoline stock build has raised concerns about a disparity between the market’s “Goldilocks narrative” and actual demand, “especially when considering gasoline demand as a forward indicator of economic activity,” he added.
By Aparupa Mazumder
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