Oil prices experienced an increase today, Thursday, driven by a series of influential factors. A larger-than-expected U.S. crude storage withdrawal, a significant decline in U.S. crude output, Chinese economic stimulus, and geopolitical tensions collectively contributed to the price rally.
By 7:58 AM GMT, Brent crude futures saw a 0.49 percent increase, settling at $80.43 per barrel. Meanwhile, U.S. West Texas Intermediate (WTI) recorded a 0.56 percent gain, settling at $75.51. These price movements underscore the impact of global events on oil markets.
Chinese stimulus
Further supporting oil prices was the optimism surrounding China’s economic recovery. The Chinese central bank’s recent decision to cut banks’ reserve ratios is expected to inject approximately $140 billion into the banking system. This move, in addition to China’s expanded scope for commercial property lending, supports the economy and the struggling real estate sector, sparking hopes for increased oil demand.
U.S. crude stocks
The Energy Information Administration reported a significant 9.2 million-barrel withdrawal in U.S. crude stocks last week. This surpassed the 2.2 million-barrel draw that analysts forecasted which played a crucial role in boosting oil prices.
Moreover, extreme weather conditions, including an Arctic freeze, led to a decline in U.S. crude output. From a record-tying 13.3 million barrels per day (bpd) two weeks ago, production dropped to a five-month low of 12.3 bpd last week as oil wells froze.
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Geopolitical tensions
Geopolitical tensions remain a key driver affecting oil prices. With global intervention and rising risks in the Red Sea, concerns about global oil trade disruptions are increasing.
Despite geopolitical risks and potential disruptions, analysts note that these factors are not fully reflected in current oil prices. Hence, the threat of delays and disruptions is causing some alarm but is not significantly impacting prices at this stage.
The oil market continues to navigate a complex landscape influenced by geopolitical tensions, unexpected production challenges, and macroeconomic factors. As global events unfold, market participants will closely monitor these dynamics for potential impacts on oil prices in the days to come.
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