Crude oil prices picked pace on Thursday, June 27, driven by worries over global crude supply disruptions as geopolitical pressure in the Middle East and Europe increased, while a surprise build in US crude and gasoline inventories capped gains. The geopolitical risk premium outweighed the higher US supply.
Brent crude oil futures were up 92 cents, or 1.08 per cent, to $86.17 per barrel. US West Texas Intermediate crude futures rose 86 cents, or 1.06 per cent, to $81.76. On Wednesday, both global benchmarks settled slightly higher. Coming to domestic prices, crude oil futures last traded 0.04 per cent higher at ₹6,807 per barrel on the multi commodity exchange (MCX).
What’s pushing crude oil prices?
-The cross-border strains between Israel and Lebanon’s Hezbollah have been escalating, fanning fears that a widening war could draw in other countries including major oil producer Iran. The French foreign ministry said France is extremely concerned about the situation in Lebanon and called for restraint.
-Israel stormed a neighbourhood in Gaza City, telling Palestinians that they must move towards south. Israeli forces bombed the southern city of Rafah in what it called thefinal stages of an operation against Hamas militants.
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-The Houthi militia, which controls the most populous parts of Yemen, has staged attacks on ships in the waters off the country for months in solidarity with Palestinians fighting Israel in Gaza. In Europe, Russia is considering a possible downgrade of relations with the West due to deeper involvement of US and its allies in the Ukraine war, but no decision had been made as yet.
-The US Energy Information Administration (EIA) reported a 3.6 million barrel jump in the country’s crude oil stocks last week. US gasoline stocks rose by 2.7 million barrels. In Europe, independently held gasoline stocks in storage in the Amsterdam-Rotterdam-Antwerp (ARA) refining and storage hub rose by over nine per cent in the week to Thursday, data from Dutch consultancy Insights Global showed, suggesting limited scope for transatlantic US gasoline demand.
Where are prices headed?
WTI crude oil futures pared early gains and closed marginally higher on Wednesday as an unexpected inventory addition raised concerns about weakening demand in the world’s top oil consumer, according to analysts.
‘’US gasoline stocks also rose by 2.654 million barrels, but distillate stockpiles went down by 0.377 million barrels. However, downside remain limited amid escalating conflict in the Middle East, with brewing tensions between Israel and Lebanon’s Hezbollah,” said Kaynat Chainwala, AVP-Commodity Research, Kotak Securities.
Fears that the Gaza war could escalate and disrupt Middle Eastern supplies limited the decline. Cross-border tensions between Israel and Lebanon’s Hezbollah have risen in recent weeks, raising worries of a full-fledged Israel-Hezbollah war that might involve other regional nations, notably major oil producer Iran, according to Rahul Kalantri, VP Commodities, Mehta Equities Ltd
‘’Crude stockpiles at the Cushing, Oklahoma, delivery hub decreased by 226,000 barrels this week. We expect crude oil prices to remain volatile. Crude oil has support at $79.40-$78.70 and resistance at $81.00-$81.65. In INR, crude oil has support at ₹6,700- ₹6,630 and resistance at ₹6,875- ₹6,940,” said Kalantri.
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Published: 27 Jun 2024, 10:35 PM IST