Crude oil price (CL=F) is set to finish lower for a fourth consecutive trading session as most of the premium built up by the Israel-Hama conflict disappears. Prices have also dropped as new US government data showed domestic crude and gasoline inventories were on the rise.
Crude Oil Price Action
On NYMEX, the West Texas Intermediate crude for December delivery CL00 dropped by 0.7%, or $0.62, to $83.12 a barrel.
On ICE Futures Europe, the December Brent Crude BRNZ23 fell by 0.3%, or 24 cents, to $87.83 a barrel. Both Brent and WTI crude have seen three consecutive drops.
On NYMEX, November gasoline RBX23 fell by 0.7% to $2.2508 a gallon, while November heating oil HOX23 fell by 2% to $2.9848 a gallon.
Meanwhile, the November natural gas NGX23 gained 0.8% to $2.995 per million British thermal units.
Market Forces
Worse-than-expected European economic data weighed down on oil prices on Tuesday, October 24, 2023. Additionally, the release of more hostages by Hamas and the delay of Israel’s ground invasion knocked down prices. While there are still fears of an escalation, the intensity of the concern has waned.
WTI crude futures, the primary US benchmark, were at $82.79 before the Hamas attack on October 7, 2023. It peaked at a high of $89 and has since lost more of its gains since the conflict began. A major reason for this is that oil supplies from the Middle East have remained uninterrupted.
US Supply Data
US supply data, released on Wednesday, October 25, 2023, revealed that commercial crude inventories had risen by 1.4 million barrels in the week ending October 20, according to the EIA. The figure was higher than the forecast of 1.1 million barrels.
The EIA report also revealed that there had been a supply increase of 200,000 barrels for gasoline, while distilled stockpiles fell by 1.7 million barrels. The analysts had predicted a 1.3 billion barrel decrease for gasoline and a 3.3 million barrel decrease for distillates. In its report, the EIA also revealed that domestic petroleum production was at a steady 13.2 million barrels per day.
Impact of Iran Sanctions
Following the Hamas attack, the Biden administration plans to impose new sanctions on Iran’s crude oil sector. However, those sanctions are unlikely to have an impact on US oil prices. The reason for this is that most of Iran’s crude oil supply goes to China.
Crude Oil Forecasts
According to a recent EIA report, global oil demand will outpace global oil supply. The main reason, according to the EIA, is the decision by OPEC+ members to cut oil production by 340,000 b/d in 2024.
The upcoming cut follows a 1.39 million b/d cut in 2023 that partly offset an increase of 2.7 million b/d by non-OPEC producers.
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