Oil prices rose on Wednesday after US oil storage data showed a bigger-than-expected decline in crude inventories as refiners ramped up production ahead of the summer.
Brent crude futures were up 31 cents, or 0.37 percent, at $83.47 a barrel by 18:00 GMT, while US West Texas Intermediate crude futures were up 50 cents, or 0.64 percent, at $78.88 a barrel.
Oil prices are rising
U.S. crude oil inventories fell 1.4 million barrels to 459.5 million barrels in the week ended May 3, 2024, according to the U.S. Energy Information Administration, slightly more than analysts expected.
“Strong refining activity and exports encouraged a slight rebound in crude inventories, which helped offset some of last week’s large increase,” said Matt Smith, senior oil analyst at Kpler.
However, the US Energy Information Administration expects global oil demand growth to slow this year, according to a forecast report.
A strong U.S. dollar has driven down crude oil prices, and a strong dollar has weakened demand for oil by making it more expensive for investors holding other currencies.
Impact of escalation in Gaza on oil
Hopes for a ceasefire in Gaza have put some downward pressure on oil prices in recent trading sessions, and some analysts believe the risk premium on oil has fallen in parallel.
For his part, BVM’s oil analyst John Evans said: “Removing the current geopolitical pressure, the market is staring at a world of persistent inflation in the US, offset by high interest rates, which not only keep the US dollar high, but create any kind of commodity… trading commodities. more expensive than that.”
CIA Director William Burns traveled to Israel on Wednesday to meet with Israeli Prime Minister Benjamin Netanyahu, as the United States hopes to include talks on a ceasefire in Gaza to bridge the gap between Israel and Hamas.
Morgan Stanley analysts see geopolitical risks to oil prices dissipating as fears of further escalation in the conflict ease.
OPEC Plus and the Oil Market
Markets were also weighed down by expectations for fresh production cuts by the Organization of the Petroleum Exporting Countries and its allies OPEC+ at a policy meeting on June 1.
Russian Deputy Prime Minister Alexander Novak said on Tuesday that there was no discussion on increasing oil production by OPEC Plus, which came after an earlier report that OPEC Plus may consider the option of increasing production.
