Oil prices rose in early trading due to U.S. fuel inventory decline and Middle East tensions. Brent crude increased 0.57% to $71.18, and WTI rose 0.51% to $67.50. A notable drawdown in U.S. distillate inventories and geopolitical instability further influenced price movements.
In the early trading hours on Thursday, oil prices experienced an increase due to a decline in U.S. fuel inventories coupled with escalating tensions in the Middle East. Brent crude futures climbed by 40 cents, reflecting a 0.57% rise, reaching $71.18 per barrel. Meanwhile, U.S. West Texas Intermediate (WTI) crude saw a 34-cent increase, or 0.51%, settling at $67.50.
This rise in oil prices followed a report from the U.S. government indicating a significant drawdown in distillate inventories, which include diesel and heating oil. The inventories fell by 2.8 million barrels last week, a substantial drop compared to the projected 300,000-barrel decrease as per a Reuters poll. However, U.S. crude inventories saw an increase of 1.7 million barrels, surpassing the anticipated rise of 512,000 barrels.
Geopolitical instability contributed further to the rise in global risk premiums. Israel resumed a ground operation in Gaza, violating a two-month ceasefire, while U.S. airstrikes continued against Houthi targets in Yemen as retaliation for their recent attacks on ships in the Red Sea. Former President Trump has publicly stated his intention to hold Iran accountable for any future Houthi actions.
Ukrainian President Volodymyr Zelenskiy mentioned the potential for a rapid halt of strikes on energy installations amidst the ongoing conflict with Russia, indicating possible progress toward a ceasefire that could soon lead to the easing of sanctions and a return of Russian oil to international markets. Additionally, Trump’s Middle East envoy, Steve Witkoff, announced forthcoming talks between U.S. and Russian officials in Saudi Arabia aimed at resolving the ongoing war.
In North America, Chevron’s CEO requested a 60-day extension from the Trump administration to cease operations in Venezuela, as reported by the Wall Street Journal. Venezuelan state-run oil company PDVSA is reportedly planning to maintain oil exports from its joint venture with Chevron despite these developments.
The rising oil prices can be attributed to both a reduction in U.S. fuel inventories and increasing geopolitical tensions in the Middle East. The significant drawdown in distillate inventories has contributed positively, while global risk factors remain high due to ongoing military actions. With potential diplomatic efforts underway, the oil market remains closely monitored for future changes that could impact supply dynamics and prices.
Original Source: www.cnbc.com
