Adedapo Adesanya
By Adedapo Adesanya
Oil rose for a third consecutive day on Wednesday, despite a larger-than-expected build in US crude inventories and rising tensions in the Middle East.
During the session, Brent crude futures gained 62 cents or 0.79 per cent to close at $79.21 per barrel while the US West Texas Intermediate (WTI) crude climbed 55 cents or 0.75 per cent to $73.86 per barrel.
The US Energy Information Administration (EIA) reported an inventory increase of 5.5 million barrels for the week to February 2, in contrast to the build of 1.2 million barrels for the previous week that depressed oil prices.
On Tuesday, the American Petroleum Institute (API) estimated crude oil inventories had added a modest 674,000 barrels in the week to February 2, much less than the 2.13 million barrels that analysts expected inventories to have added during the period.
Meanwhile, gasoline stocks shed 3.1 million barrels in the week to February 2 compared with a build of 1.2 million barrels for the previous week.
On the supply side, the EIA cut its 2024 outlook for domestic oil output growth on Tuesday, putting it far lower than the 2023 increase and predicting it would not reach December 2023’s record levels until February 2025.
The market is also keeping an eye on developments in the Middle East as Israel’s Prime Minister, Mr Benjamin Netanyahu, said total victory in Gaza was within reach as he rejected the latest offer from Hamas for a ceasefire to ensure the return of hostages still held in the besieged enclave.
The remarks dismiss the latest offer by Hamas for a ceasefire in Gaza showing he intends to pursue conflict in the Middle East.
Traders are also tracking the Iranian-backed Houthi rebels’ attacks on shipping in the Red Sea that have disrupted traffic through the Suez Canal, the fastest sea route between Asia and Europe and one that carries nearly 12 per cent of global trade.
Mixed signals from the US Federal Reserve also contributed to the pressure as Federal Reserve Bank of Boston President Susan Collins said if the economy met her expectations the central bank would likely be able to lower rates at some point later this year.
If this is done, it would lend support to crude futures.
The International Energy Agency (IEA) said India is expected to be the largest driver of global oil demand growth between 2023 and 2030, narrowly taking the lead from top importer China, which is denting confidence in the global oil demand outlook.
