Oil prices increased on Wednesday, erasing earlier losses, following an incident that involved a commercial vessel off Oman’s coast. However, in China, rising cases of COVID-19 capped gains.
Brent crude futures witnessed a gain of 0.7% or 65 cents, to $94.51 per barrel by 0854 GMT, and US West Texas Intermediate (WTI) crude futures increased by 0.4% or 35 cents to $87.27 per barrel. Both these benchmarks dropped by over $1 earlier.
The US Navy’s Fifth Fleet mentioned it was aware of the commercial vessel incident in the Gulf of Oman; Commander Timothy Hawkins informed Reuters.
The Associated Press informed that an oil tanker flying the flag of Liberia and operated by Singapore’s Eastern Pacific Shipping got struck off the Gulf of Oman in a drone attack.
Oil prices reportedly settled higher on Tuesday following the temporary suspension of oil supply to parts of Europe via a section of the Druzhba pipeline, per major oil pipeline operators in Slovakia and Hungary.
The disruption, however, was concurrent with an explosion in eastern Poland close to Ukraine’s border that took the lives of two and raised the chances that the Russian-Ukraine conflict could once again spill over.
Innes explained that US President Joe Biden’s comments that the missile was possibly not fired from Russia helped ease worries of an immediate escalation.
In China, an increasing number of new COVID-19 cases weighed on sentiment following the easing of restrictions this week.
China’s oil demand growth is currently hampered by its unyielding hope in a stringent, zero-tolerance COVID-19 policy coupled with ongoing economic weakness, Stephen Brennock, a PVM Oil analyst, mentioned.
The International Energy Agency (IEA) predicts demand growth to drop to 1.6 million BPD in 2023 from the earlier 2.1 million BPD in 2022.
Earlier, the Organization of the Petroleum Exporting Countries (OPEC) reportedly cut its forecast for 2022’s global oil demand growth for the fifth time since April this year and cited an increase in economic challenges.
Industry data reflects a higher-than-expected fall in US crude stockpiles that supported oil prices.
US crude oil inventories also fell by about 5.8 million barrels for the week that ended on 11 November, market sources mentioned, citing figures shared by the American Petroleum Institute.
Seven analysts polled by Reuters reportedly estimated that crude inventories fell by almost 400,000 barrels on average.
Official US inventory data received from the Energy Information Administration is expected at 10:30 a.m. EST.
References: The Guardian, Business Standard, The Print