Oil Prices Rise as U.S. Crude Stocks Show Lower-than-Expected Increase
Positive Industry Data Boosts Oil Prices
Oil prices edged higher for the third consecutive day following positive industry data. The U.S. saw a lower-than-expected increase in oil stocks, while the country sharply reduced its forecast for oil output growth, easing concerns about potential oversupply.
Oil Futures See Incremental Gains
Oil futures rose by 0.2% to $78.75 a barrel, while U.S. West Texas Intermediate crude climbed by 0.3% to $73.51. The American Petroleum Institute reported a rise of 670,000 barrels in the week to Feb. 2, well below the forecasted 1.9 million barrel build.
Forecast for U.S. Oil Output Growth Revised Downward
The U.S. Energy Information Administration (EIA) cut its outlook for domestic oil output growth by 120,000 barrels per day to 170,000 bpd for 2024. This marked a significant decrease from last year’s output increase of 1.02 million bpd.
Market Outlook and Geopolitical Considerations
Analysts at Haitong Futures anticipate the oil market to be balanced in 2024, with oil prices expected to remain within a $10 range around current levels. Meanwhile, mediators from the U.S., Qatar, and Egypt are working on a diplomatic push to bridge differences between Israel and Hamas on a ceasefire plan for Gaza.
Geopolitical Risks and Their Impact on Oil Prices
Traders are closely monitoring the situation in the Middle East, especially the attacks on shipping by Iranian-backed Houthi rebels in the Red Sea. These attacks have disrupted traffic through the Suez Canal, a crucial sea route between Asia and Europe that accounts for nearly 12% of the global oil trade.
Supply Factors and Production Boost
Exxon Mobil, a consortium leading oil production in Guyana, is now pumping about 645,000 bpd in the South American country, a significant increase from the 400,000 bpd output in late 2023.
