Get 40% Off
🚨 Volatile Markets? Find Hidden Gems for Serious OutperformanceFind Stocks Now

Oil prices settle higher, but gains kept in check by surprise rise in US supplies

Published 04/02/2024, 08:56 PM
Updated 04/03/2024, 03:51 PM
© Reuters

Investing.com-- Oil prices settled slightly higher Wednesday, as traders weighed a surprise increase in weekly U.S. crude inventories against ongoing geopolitical tensions that threaten to disrupt global supplies.

At 14:30 ET (18:30 GMT), West Texas Intermediate crude futures expiring in June rose 0.3% to $85.43 a barrel, and Brent oil futures rose 0.5% to $85.43 a barrel.

US crude supplies in surprise increase

U.S. oil supplies increased by about 3.2M barrels in the week ended Mar. 29, confounding expectations for a decline about 300,000 barrels.

Gasoline inventories, one of the products that crude is turned into, decreased by roughly 4.3M barrels, much more than expectations for a 820,000 barrels decline while distillate stockpiles fell by 1.3M barrels, compared to expectations for a drop of 604,000 barrels.

The mixed petroleum report comes as U.S. oil output growth is forecast to slow, the EIA said Tuesday, after cutting its forecast for 2024 domestic production to 120,000 barrels per day to 170,000 bpd.

OPEC+ keeps output levels unchanged

OPEC+ ministers made no fresh policy recommendations in a meeting earlier Wednesday, as a ministerial committee of the Organization of the Petroleum Exporting Countries and allies, led by Russia, met to review the market and members' implementation of output cuts.

OPEC+ members last month agreed to extend voluntary output cuts of 2.2 million barrels per day until the end of June to support the market.

This tightening of global supply is occurring amid fears of a broader conflict in the Middle East. Iran vowed retaliation against Israel for strikes on the Iranian embassy compound in Damascus, presenting the possibility of more supply disruptions in this oil-rich region.

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

Elsewhere, oil prices had risen earlier this week after Mexico said it will also cut its oil exports, and Ukraine attacked Russia’s third-largest oil refinery earlier this week, although Reuters reports said the attack did not cause critical damage.

But the strike comes in the wake of several such attacks against Russia’s energy infrastructure - a trend that could potentially further stymie oil exports from Moscow.

Expectations of tighter supplies helped oil prices rise past a stronger dollar and growing uncertainty over the path of U.S. interest rates.

BofA lifts its oil price forecasts

Bank of America Global Research has raised its 2024 Brent and WTI oil price forecasts, citing escalating geopolitical tensions and the OPEC+ producer group maintaining supply curbs.

The bank now expects Brent and WTI crude prices this year to average $86 and $81 per barrel respectively, with prices of both peaking around $95 per barrel during the summer.

"We now estimate that improving economic growth expectations have helped push global oil markets into a deficit in 2Q24 and 3Q24 of ~450 thousand barrels per day" BofA said in a research note, which did not include its previous forecasts.

"Geopolitical turmoil has also boosted oil demand via longer trade routes and impacted supply by reducing refining capacity via attacks on Russian energy infrastructure." the bank said.

(Peter Nurse, Ambar Warrick contributed to this article.)

Latest comments

xistos se bucure
Time for the Opec excuses
Sven is a pedophile.
Not funny, Gary !!🤮
Mess with the bull and you'll get the horns.
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.