Oil prices rise amid geopolitical risks and US inventory increase
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Brent crude futures rose by 0.2% to $72.97, while West Texas Intermediate (WTI) futures also gained 0.23% to $68.91 in early trading on Thursday. The price uptick reflects heightened market concerns about geopolitical tensions stemming from the Russia-Ukraine conflict, offset by a larger-than-expected rise in US crude oil inventories.
Geopolitical Influence
Ukraine's recent use of British Storm Shadow cruise missiles and U.S. ATACMS missiles to strike targets within Russia has escalated tensions. This marks a significant escalation in the conflict, now in its 1,000th day, with potential implications for global energy supply, particularly if Russian energy infrastructure becomes a target. Moscow's response remains a key variable for oil markets, as analysts at ING highlight the risks to energy infrastructure and escalation uncertainties.
Demand and Supply Outlook
Global Demand Recovery: JP Morgan reports an increase in global oil consumption to 103.6 million barrels per day (bpd) during the first half of November, driven by improved travel demand in the U.S. and India, along with a rise in industrial activity.
US Crude Inventories: The Energy Information Administration (EIA) revealed a 545,000-barrel increase in US crude stocks to 430.3 million barrels last week, exceeding forecasts of a 138,000-barrel rise. Gasoline stocks also grew more than anticipated. Distillate stockpiles, however, showed a larger-than-expected draw, partially offsetting bearish inventory data.
Additional Supply Considerations
Norway's Equinor announced the full restoration of output capacity at the Johan Sverdrup oilfield, alleviating short-term supply concerns.
OPEC+ Policy: Discussions ahead of the December 1 meeting suggest OPEC+ may reconsider previously planned output increases due to weak global demand signals. The International Energy Agency (IEA) projects that even with OPEC+ cuts, global oil supply could exceed demand by 2025 due to rising production from non-OPEC+ countries like the U.S.
Technical Perspective
Key Support Levels: Brent crude could find support near $71.50, with further downside limited by potential geopolitical risks. WTI support is seen near $67.00, bolstered by the demand recovery narrative.
Resistance Levels: Brent faces resistance around $74.20, with any sustained breakout likely driven by additional geopolitical escalation. WTI resistance is pegged at $70.00, contingent on favorable demand metrics. Outlook
The interplay between geopolitical risks, demand recovery, and inventory dynamics will continue to influence oil prices. While Russia-Ukraine tensions provide an immediate upside bias, the U.S. inventory build and concerns over long-term oversupply may cap significant gains. Traders will closely monitor OPEC+ decisions and geopolitical developments for clearer market direction.
Geopolitical Influence
Ukraine's recent use of British Storm Shadow cruise missiles and U.S. ATACMS missiles to strike targets within Russia has escalated tensions. This marks a significant escalation in the conflict, now in its 1,000th day, with potential implications for global energy supply, particularly if Russian energy infrastructure becomes a target. Moscow's response remains a key variable for oil markets, as analysts at ING highlight the risks to energy infrastructure and escalation uncertainties.
Demand and Supply Outlook
Global Demand Recovery: JP Morgan reports an increase in global oil consumption to 103.6 million barrels per day (bpd) during the first half of November, driven by improved travel demand in the U.S. and India, along with a rise in industrial activity.
US Crude Inventories: The Energy Information Administration (EIA) revealed a 545,000-barrel increase in US crude stocks to 430.3 million barrels last week, exceeding forecasts of a 138,000-barrel rise. Gasoline stocks also grew more than anticipated. Distillate stockpiles, however, showed a larger-than-expected draw, partially offsetting bearish inventory data.
Additional Supply Considerations
Norway's Equinor announced the full restoration of output capacity at the Johan Sverdrup oilfield, alleviating short-term supply concerns.
OPEC+ Policy: Discussions ahead of the December 1 meeting suggest OPEC+ may reconsider previously planned output increases due to weak global demand signals. The International Energy Agency (IEA) projects that even with OPEC+ cuts, global oil supply could exceed demand by 2025 due to rising production from non-OPEC+ countries like the U.S.
Technical Perspective
Key Support Levels: Brent crude could find support near $71.50, with further downside limited by potential geopolitical risks. WTI support is seen near $67.00, bolstered by the demand recovery narrative.
Resistance Levels: Brent faces resistance around $74.20, with any sustained breakout likely driven by additional geopolitical escalation. WTI resistance is pegged at $70.00, contingent on favorable demand metrics. Outlook
The interplay between geopolitical risks, demand recovery, and inventory dynamics will continue to influence oil prices. While Russia-Ukraine tensions provide an immediate upside bias, the U.S. inventory build and concerns over long-term oversupply may cap significant gains. Traders will closely monitor OPEC+ decisions and geopolitical developments for clearer market direction.