In early Wednesday trading, oil prices surged by nearly $2. This increase was driven by two factors: a larger-than-expected decline in US crude stocks, and concerns about potential supply disruptions from the Middle East, primarily due to the Israel-Hamas conflict.
Oil prices surged by almost $2 during early trading on Wednesday. This increase was prompted by industry data indicating a larger-than-expected reduction in US crude stocks. Additionally, concerns about potential disruptions in the oil supply from the Middle East due to the escalating Israel-Hamas conflict contributed to the price rise. Brent crude futures saw a notable increase of $1.62, or 1.8%, reaching $91.49 per barrel at 01:48. Market participants were also keeping an eye on upcoming Chinese GDP figures.
West Texas Intermediate crude (WTI) futures increased by $1.77, representing a 2% gain, reaching $88.43 per barrel.
Market sources, referencing American Petroleum Institute data from Tuesday, reported a significant drop of approximately 4.4 million barrels in US crude stocks for the week ending on October 13. This decrease far exceeded the analysts' prediction of a 300,000 barrel draw.
Official data from the US government is expected to be released later on Wednesday.
Tensions flared in the Middle East after a blast in a Gaza City hospital resulted in around 500 Palestinian casualties, with blame exchanged between Israeli and Palestinian officials.
US President Joe Biden's visit to Israel on Wednesday is intended to show support in the conflict with Hamas and the Palestinian Islamic Jihad. The White House aims to prevent the conflict from spreading.
China's third-quarter economic data, expected on Wednesday, may indicate a slowdown due to weak demand, despite stimulus measures potentially helping meet full-year growth targets.
In contrast, US retail sales for September exceeded expectations, raising the possibility of a Federal Reserve interest rate hike by year-end, which could impact economic growth and oil demand.
On Tuesday, both the Venezuelan government and its political opposition reached an agreement regarding electoral safeguards for the upcoming presidential elections in 2024. This development opens the door for potential sanctions relief by the United States, which could lead to an increase in oil exports from Venezuela. However, it's worth noting that sanctions on Venezuelan oil have been in place since 2019, and any anticipated growth in oil production is likely to be a gradual process, primarily due to the limited investments in the country's oil sector.
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