Oil Prices Surge Amid U.S. Fuel Inventory Decline and Middle East Tensions
Oil prices increased due to a notable drop in U.S. fuel inventories and rising tensions in the Middle East. Brent crude rose to $71.18 per barrel and WTI to $67.50. Key factors included a significant decline in distillate inventories and ongoing military operations affecting global risk premiums and market uncertainty.
Oil prices witnessed an increase in early trading on Thursday, influenced by a decline in U.S. fuel inventories alongside escalating tensions in the Middle East. Specifically, Brent crude futures experienced a rise of 40 cents, equivalent to 0.57%, reaching $71.18 per barrel. Concurrently, U.S. West Texas Intermediate crude (WTI) rose by 34 cents, or 0.51%, to $67.50.
The uptick in prices followed U.S. government reports indicating a greater-than-anticipated reduction in distillate inventories over the previous week. Distillate inventories, which encompass diesel and heating oil, decreased by 2.8 million barrels, significantly surpassing the projected 300,000-barrel decline as per a Reuters poll. However, U.S. crude inventories increased by 1.7 million barrels, exceeding expectations of a 512,000-barrel rise.
Global risk premiums heightened after Israel initiated a new ground offensive in Gaza on Wednesday, breaking a nearly two-month ceasefire. Additionally, U.S. airstrikes on Houthi positions in Yemen continued in response to recent attacks on vessels in the Red Sea. Furthermore, former President Trump has indicated a commitment to hold Iran accountable for potential future Houthi assaults.
Amid the tumultuous geopolitical landscape, Ukrainian President Volodymyr Zelenskiy suggested that a cessation of strikes on energy infrastructure in the ongoing conflict with Russia could be reached swiftly, hinting at potential discussions for a ceasefire. He implied that such an agreement may lead to an easing of sanctions and the restoration of Russian oil supplies to the global market.
In the Americas, Chevron’s CEO has formally requested a 60-day extension from the Trump administration to finalize operations in Venezuela, as reported by the Wall Street Journal. This request extends beyond the original deadline set for April 1. In response, Venezuela’s state-run oil entity, PDVSA, is reportedly preparing to maintain oil exports from its collaborative ventures with Chevron, according to Reuters.
In summary, the rise in oil prices can be attributed to multiple factors, including significant declines in U.S. distillate inventories and increasing geopolitical tensions in the Middle East. The ongoing military actions by Israel and the U.S. against Houthi targets are contributing to global risk premiums. Moreover, developments in Russia and Ukraine, alongside Chevron’s operational adjustments in Venezuela, are further impacting the oil market dynamics, suggesting a complex interplay of regional and global influences on prices.
Original Source: www.cnbc.com
