West Texas Intermediate (WTI), the benchmark for US crude oil, hovered around $68.95 per barrel on Thursday, showing little movement as a mix of factors weighed on the market. A modest increase in US crude inventories and concerns over weakening global demand tempered the effects of escalating geopolitical tensions, particularly the ongoing conflict between Russia and Ukraine.
The latest data from the Energy Information Administration (EIA) revealed a rise in US crude oil stockpiles for the week ending November 15. Inventories grew by 0.545 million barrels, marking a smaller increase compared to the previous week’s jump of 2.089 million barrels. Analysts had predicted a more modest build of 0.400 million barrels, and the increase in stockpiles put downward pressure on WTI prices.
Adding to the bearish sentiment, weaker demand from China, the world’s largest importer of crude, also contributed to the decline. Recent figures showed that China’s crude oil demand dropped by 5.4% year-over-year in October. The International Energy Agency (IEA) forecasted that China’s demand growth will slow drastically in 2024, reaching just 140,000 barrels per day (bpd) – a sharp contrast to last year’s robust growth of 1.4 million bpd.
However, geopolitical concerns provided some support for the price of oil. Tensions between Russia and Ukraine have intensified, raising fears of potential disruptions to global oil supplies. On Tuesday, Russia’s defense ministry reported that Ukraine had struck a facility in Bryansk with six ATACMS missiles. In response, Russian President Vladimir Putin signaled a heightened risk of nuclear escalation, which added to market uncertainty.
John Kilduff, a partner at Again Capital in New York, noted that “These risks to supply are definitely keeping the support here and offsetting to a degree concerns around the global demand outlook,” highlighting the complex dynamics influencing the WTI market.
As geopolitical risks continue to simmer, the market remains in a delicate balance, with supply disruptions and demand uncertainties both playing a pivotal role in the price of oil.
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