Adedapo Adesanya
By Adedapo Adesanya
Oil prices were little changed on Tuesday amid signs tensions in the Middle East could be easing and uncertainty about US oil inventories, with Brent futures falling by 5 cents to $82.47 a barrel and the US West Texas Intermediate (WTI) futures held steady at $78.26.
Analysts warned that the war premium is going away as it is looking more likely that there will not be a disruption in supply in the Middle East.
Oil has fallen sharply since mid-October as the Israel-Hamas war risk premium evaporated and doubts set in about the demand outlook, before rising in the three days through Monday.
US President Joe Biden said he was holding daily discussions to secure the release of hostages held by the Hamas militant group and believes it will happen.
The White House said President Biden’s top Middle East adviser, Mr Brett McGurk, is heading to the region for talks with officials in Israel, the West Bank, Qatar, Saudi Arabia, and other nations.
The International Energy Agency (IEA) boosted its demand growth forecasts and the US Dollar fell on data showing inflation was slowing in the world’s biggest economy.
The Paris-based agency said global oil markets won’t be as tight as expected this quarter, with production growth in the US and Brazil beating forecasts.
This came after an assessment from the Organisation of the Petroleum Exporting Countries (OPEC) that highlighted robust growth trends and healthy fundamentals.
OPEC boosted its forecast for 2023 global oil demand growth and stuck to its relatively high projection for 2024.
Market analysts note that the differing views from the two bodies will likely keep oil markets on edge on demand concerns, although OPEC+ supply policy will be key.
Crude oil inventories in the United States rose again this week, adding 1.335 million barrels into inventory for the week ending November 10, according to The American Petroleum Institute (API), after an 11.9-million-barrel rise in crude inventories in the week prior, API data showed. Analysts had expected a 1.4 million barrel build.
API data now shows a net build in crude oil inventories in the United States of 11.9 million barrels so far this year.
Official data will be released by the US Energy Information Administration (EIA) later on Wednesday after not publishing last week.
Also, a soft US inflation outcome on Tuesday could see the US Federal Reserve start cutting interest rates by mid-2024, aiding the longer-term outlook for oil consumption and sending the Dollar tumbling.
A weaker Dollar can boost oil demand by making crude cheaper for buyers using other currencies.
However, data from China pointed to near-term demand weakness, with refining activity dropping to the lowest since July last month on weak margins.
