Oil futures experienced a boost on Thursday due to several key factors, including the shutdown of Libya's largest oil field and escalating tensions surrounding the Israel-Hamas conflict. Industry data also revealed a significant drop in U.S. crude inventories, adding to the positive sentiment.
- West Texas Intermediate crude for February delivery rose 71 cents, or 1%, reaching $73.41 a barrel on the New York Mercantile Exchange.
- Brent crude for March delivery, the global benchmark, increased by 62 cents, or 0.8%, and stood at $78.87 a barrel on ICE Futures Europe.
Crude oil is heading for consecutive gains following a rebound in the previous session. The closure of Libya's Sharara oil field, responsible for producing 300,000 barrels of crude per day, contributed to the surge.
Moreover, concerns of a broader conflict in the Middle East escalated after blasts in Iran resulted in the death of 95 people and left over 200 injured. These events occurred during a ceremony commemorating the anniversary of a senior Islamic Revolutionary Guard officer killed by a U.S. airstrike in 2020.
According to Warren Patterson and Ewa Manthey, analysts at ING, although the culprits behind the attack remain unknown, it further intensifies the growing tensions in the region.
Unraveling the Mystery Behind the Recent Attack in Iran
Iran finds itself once again under attack, this time with a devastating assault that has left many searching for answers. As experts contemplate the possible culprits, a range of foes come to light, including exile groups, militant organizations, and even state actors.
It is worth noting that while Israel has been known to target Iran due to its nuclear program, previous attacks have focused on targeted assassinations rather than mass casualty bombings. Furthermore, the U.S. State Department has stated that American officials "have no reason" to believe Israel was involved in this specific incident.
This attack occurs against the tumultuous backdrop of the ongoing Israel-Hamas war, raising concerns about the potential for a wider conflict that could disrupt crude supplies from the Middle East. In fact, major shipping companies have already taken precautionary measures by suspending cargo shipments through the Red Sea. These precautions were prompted by a series of drone and missile attacks launched by Iran-backed Houthi rebels in Yemen since the start of the war.
See: Red Sea Crisis Highlights the Urgency of Addressing the Potential Wider War Involving Iran
As tensions rise and uncertainty looms, the American Petroleum Institute, a prominent industry trade group, has revealed some startling news. Late Wednesday, the group reported that U.S. crude inventories plummeted by 7.4 million barrels last week—an astonishing figure that far exceeds analysts' predictions. These predictions will soon be confirmed or amended when the U.S. Energy Information Administration releases official data Thursday morning.
However, it is crucial to recognize that this decline in crude inventories does not tell the whole story. While stocks of crude oil have fallen dramatically, there has been a considerable increase in product inventories. Specifically, gasoline stocks have surged by 6.9 million barrels, while distillate supplies have risen by 6.7 million barrels.
All eyes now turn to unraveling the mysteries surrounding this attack as Iran and its neighbors brace themselves for the potential aftershocks that may reverberate across the region.
# U.S. Oil Inventories Show Positive Trends
Analysts surveyed by S&P Global Commodity Insight are predicting a positive shift in U.S. oil inventories. According to their findings, it is expected that the Energy Information Administration (EIA) will announce a significant decline in crude inventories by 4 million barrels for the previous week. Alongside this decline, gasoline inventories are anticipated to see a boost of 2.3 million barrels, while distillates are projected to rise by 2.6 million barrels.
This promising forecast, provided by industry experts, suggests favorable developments within the U.S. oil sector. As we await the official report from the EIA, these insights serve as an indication of potential shifts in the market.
Submitted by The Associated Press.