By Laila Kearney
NEW YORK (Reuters) – Oil prices climbed on Wednesday on estimates about shrinking and gasoline inventories as the market watched for a possible widening of the Middle Eastern war, which could curtail global oil supplies.
futures rose 30 cents to $80.99 a barrel by 0009 GMT. U.S. West Texas Intermediate crude increased by 38 cents to $78.73 per barrel.
U.S. crude oil and gasoline inventories were expected to have fallen last week, while distillate stocks rose, according to market sources, citing American Petroleum Institute data on Tuesday.
The API figures showed crude stocks shrunk by 5.21 million barrels in the week ended Aug. 9, the sources said, speaking on condition of anonymity. Gasoline inventories eased by 3.69 million barrels, and distillates rose by 612,000 barrels.
Falling inventories could indicate higher demand in the U.S., the world’s biggest oil consumer.
Official government data from the Energy Information Administration is due later on Wednesday.
The market was also awaiting signs of the next moves by Iran, which has vowed a severe response to the killing of a Hamas leader late last month, which Tehran blamed on Israel. Israel has neither confirmed nor denied its involvement. The U.S. Navy has deployed warships and a submarine to the Middle East to bolster Israeli defenses.
A broadening conflict in the region could affect crude supplies from Iran and neighboring producer countries, analysts said, tightening inventories and supporting prices.
Keeping oil prices from moving even higher, the International Energy Agency (IEA), meanwhile, kept its 2024 global oil demand growth forecast unchanged on Tuesday but trimmed its 2025 estimate, citing the impact of a weakened Chinese economy on consumption.
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Analysis:
In summary, oil prices have risen due to shrinking inventories and geopolitical tensions in the Middle East. The potential widening of conflict could impact global oil supplies, leading to higher prices. The demand for oil in the U.S. seems to be increasing, as indicated by falling inventories. However, uncertainties surrounding Iran’s response to recent events and the IEA’s revised demand forecast for 2025 due to the Chinese economy could influence future oil price movements. Investors should closely monitor these developments to make informed decisions regarding their investments.