West Texas Intermediate (WTI) ended a four-day losing streak, trading around $72.50 per barrel on Wednesday. The benchmark crude oil is getting support from rising concerns about supply constraints due to ongoing geopolitical tensions in the Middle East.
Hamas named Yahya Sinwar as its new leader in Gaza following the assassination of former chief Ismail Haniyeh. There are concerns about potential escalation in the region, with Iran and its allies — Hamas and Hezbollah — vowing retaliation against Israel and the United States for the killing of the Hamas leader, according to Reuters.
However, the potential for a rebound in oil prices may be constrained by bearish demand sentiment. Chinese trade data showed that daily crude oil imports in July dropped to their lowest level since September 2022 in the largest crude importer of the world.
The American Petroleum Institute (API) reported an increase of 0.18 mln barrels in the Weekly Crude Oil Stock for the week ending August 2, falling short of the expected 0.85 mln barrels. This follows a previous decline of 4.495 mln barrels. Additionally, the US Energy Information Administration is set to release its Crude Oil Stocks Change report later in the day.
On Tuesday, Reuters reported that the EIA estimates global oil inventories decreased by 400,000 barrels per day (bpd) in the first half of 2024. The EIA projects stockpiles will decline by around 800,000 bpd in the second half of the year.
OPEC+ Production Plans
The Organisation of the Petroleum Exporting Countries (OPEC) and other producers, including Russia (OPEC+), are sticking to their plan to gradually end voluntary production cuts starting in October. Nevertheless, a Reuters survey released on Friday showed that OPEC’s oil output increased in July, even with the group’s production cuts in effect.
Source: OANDA
