Oil prices increased by about $2 in early trade on Wednesday as industry data revealed a larger-than-anticipated draw in U.S. oil storage and concerns about Middle Eastern supply disruptions as a result of the escalating Israel-Hamas war. The price of Brent crude futures increased $1.62, or 1.8%, to $91.49 a barrel as investors prepared for the release of Chinese GDP data. The price of a barrel of West Texas Intermediate crude (WTI) futures increased $1.77, or 2%, to $88.43.
According to market sources citing American Petroleum Institute data on Tuesday, U.S. crude stocks decreased by around 4.4 million barrels in the week ending October 13. That was substantially steeper than the analysts’ predicted 300,000 barrel draw. To help Israel in its conflict with the Palestinian Islamic Jihad militant group Hamas, Vice President of the United States is scheduled to visit the country on Wednesday. He will make it clear that he does not want the conflict to worsen, the White House promised.
On the demand side, data due out on Wednesday are expected to reveal that China’s economy slowed down in the third quarter due to consistently poor demand. However, the odds for Beijing meeting its full-year growth target have brightened due to greater stimulus. The Federal Reserve is projected to raise interest rates again by year’s end as a result of the United States’ retail sales rising more than anticipated in September. Oil demand may decline if interest rates are raised to combat inflation.
On Tuesday, the Venezuelan government and its political opposition agreed on electoral assurances for the 2024 presidential elections, opening the door for potential U.S. sanctions easing that would increase oil supply. Since 2019, the United States has imposed sanctions on Venezuelan oil exports. While the lifting of the sanctions is anticipated to increase oil supply and flow, analysts predict that any rises from the nation would be gradual due to a lack of investment.
