By Adedapo Adesanya
Brent crude rose by 2.34 per cent or $2.06 to $90.13 per barrel on Wednesday, buoyed by fresh worries about conflict in the Middle East.
However, the gains were capped by higher crude inventories in the US and gloomy economic prospects in Europe, though the West Texas Intermediate (WTI) crude futures appreciated by 1.97 per cent or $1.65 to $85.39 a barrel.
After earlier signs that the situation was losing steam in the oil market, Israel reportedly stepped up bombings of south Gaza while violence flared elsewhere in the Middle East.
Israel’s Prime Minister, Mr Benjamin Netanyahu, said in a televised statement that the country was preparing a ground invasion of Gaza.
Earlier this week, the US advised Israel to hold off on a ground assault and it is holding talks with Qatar as it tries to free more hostages and prepare for a possible wider regional war.
The market was pressured after the US Energy Information Administration (EIA) reported an inventory increase of 1.4 million barrels for the week to October 20 versus an inventory draw of 4.5 million barrels for the previous week.
A day before the EIA’s report came out, the American Petroleum Institute (API) estimated inventories had declined by 2.7 million barrels in the week to October 20.
It also reported a sizeable gasoline inventory draw that helped push prices higher.
The latest economic data from Europe helped soften prices too. S&P Global reported that the PMI for the Euro zone this month fell to 46.5 from 47.2 in September. This is the lowest reading since November 2020.
European Central Bank (ECB) data showed bank lending across the Euro zone came to a near standstill last month, further evidence that the 20-nation bloc may be close to a recession.
Crude demand could get a boost in China, the world’s biggest oil importer, which approved a bill to issue 1 trillion yuan ($137 billion) in sovereign bonds and allow local governments to issue new debt from their 2024 quota to boost the economy.
However, the country also took steps that could limit crude demand, such as putting a ceiling for its oil refining capacity at 1 billion metric tons by 2025 to streamline its vast oil processing sector and curb carbon emissions.
