Quantum Commodity Intelligence – Crude oil futures edged lower on Wednesday as an unexpected rise in U.S. crude inventories erased earlier gains amid ongoing tensions in the Middle East.
Front month Oct24 ICE Brent Futures were traded at $80.01/b (17:45 GMT), compared to Tuesday’s close of $80.69/b.
At the same time Sep24 NYMEX WTI was traded at $77.12/bcompared to Tuesday’s closing price of $78.35/b.
The price drop came after the EIA reported an unexpected 1.35 million barrel increase in U.S. crude inventories last week, but the overall market driver remains tensions in the Middle East.
The sharp rise in crude oil prices last week was triggered by fears of an escalation in the Middle East. So far, however, Iran has refrained from announcing plans to attack Israel.
“Geopolitical tensions have increased after Iran announced it would seek revenge against Israel for the assassination of a Hamas leader in Tehran late last month,” Rystad Energy said in a customer note.
“The situation remains tense and highly uncertain. This week and next will be crucial for whether further escalation can be avoided and whether the geopolitical risk premium will have a significant impact on oil prices,” Rystad added.
Prices received a boost earlier in the session after the American Petroleum Institute’s latest report revealed a decline in crude oil inventories of over 5 million barrels, a much larger drop than expectations of 2 million barrels.
The API also calculated a decline in gasoline inventories of 3.7 million.
Meanwhile, US inflation rates offered few surprises, with July CPI data broadly in line with expectations. Both headline and core CPI rose 0.2% in July (0.15% and 0.17% respectively).
Otherwise, Tropical Storm Ernesto is expected to take a northerly route in the Caribbean, remain in the Atlantic, and avoid oil and gas facilities in the Gulf of Mexico and along the U.S. Gulf Coast.
