Economy

Breaking News: Oil Prices Rise Amid Geopolitical Tensions and Surprising US Inventory Numbers! 📈🛢️

Oil Prices Rise Amid Geopolitical Tensions

In a world where every move in the oil market is closely watched, prices rose marginally on Thursday as geopolitical concerns over escalating tensions between Russia and Ukraine took the spotlight. The impact from a bigger-than-expected increase in US crude inventories was overshadowed by the brewing conflict.

Brent crude futures saw a 0.2 percent increase, rising 16 cents to $72.97, while US West Texas Intermediate crude futures also climbed 16 cents to $68.91.

Escalating Tensions

The situation intensified as Ukraine fired British Storm Shadow cruise missiles into Russia, following a previous attack with US ATACMS missiles. Moscow condemned the use of Western weapons on its territory, labeling it a major escalation in the conflict.

Kyiv defended its actions, stating the need to target Russian rear bases supporting Moscow’s invasion that has been ongoing for 1,000 days.

Oil Market Analysis

Analysts at ING highlighted the risks for oil prices, pointing out the potential impact if Ukrainian attacks target Russian energy infrastructure and the uncertainty surrounding Russia’s response.

JPMorgan analysts noted a recovery in oil consumption, driven by improved travel demand in the US and India, along with a significant rise in industrial demand in India.

Supply and Demand Dynamics

Global oil demand is on the rise, estimated to reach 103.6 million barrels per day in November, showing a year-on-year increase of 1.7 million barrels per day.

However, the gains were countered by a larger-than-expected rise in US crude inventories, exceeding analyst predictions. Gasoline inventories also rose, while distillate stockpiles saw a larger-than-expected draw.

Norway’s Equinor restored full output capacity at the Johan Sverdrup oilfield in the North Sea after a power outage, adding to the global oil supply.

OPEC+ Meeting and Production Plans

OPEC+ may decide to delay output increases again at their upcoming meeting on December 1, in response to weak global oil demand. The group had initially planned gradual production cuts reversal in 2024 and 2025.

Despite efforts to balance supply and demand, the International Energy Agency warned of an oversupply situation in 2025 due to rising production from the US and other non-OPEC+ producers surpassing sluggish demand growth.