Crude Oil Prices Rise Amid Supply Concerns and Stock Build

Mark Eisenberg
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Crude Oil Edges Higher on Supply Concerns; API Stocks Rise

Oil prices edged slightly higher on Wednesday due to concerns about supply disruptions in the Middle East while U.S. inventories rose more than expected.

By 08:45 ET (12.45 GMT), the futures traded 0.2% higher at $80.90 a barrel and the contract climbed 0.3% to $85.55 a barrel.

Middle East Tensions on the Rise

Both crude contracts increased by around 1% on Tuesday after Israeli Foreign Minister Israel Katz warned of a possible "all out war" with Lebanon's Hezbollah. This happens just as Israel's conflict with Hamas in Gaza showed signs of calming down. The U.S., which supports Israel, is trying to prevent a larger conflict with the Iran-backed group. An escalating war could disrupt the oil supply from this major producing region. Reports also mentioned a Ukrainian drone strike causing a fire at an oil terminal in a major Russian port, potentially affecting crude supply from this significant supplier.

US Crude Inventories Rise

The heightened tension overshadowed data showing an increase in domestic crude stocks. Many anticipated that summer driving season would increase demand and lower inventories. However, U.S. crude stocks rose by around 2.3 million barrels for the week ending June 14, compared to a drop of 2.4 million barrels the previous week.

"The surprise crude build means the report was moderately bearish," analysts at ING stated in a note.

UBS Looks for Crude Rebound

UBS forecasts that Brent crude oil will rebound to the mid to high-$80s, supported by OPEC+ cuts extension and the seasonal increase in demand. Earlier this month, the Organization of Petroleum Exporting Countries and allies (OPEC+) announced plans to phase out voluntary cuts potentially as early as October 2024. UBS added that Brent could move to $80 per barrel next year as OPEC+ starts to bring back production gradually from the second quarter.

“We do expect a negative impact on oil demand from slower GDP growth and higher prices but continue to expect demand to grow until the late 2020s," states UBS.

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Mark Eisenberg is a financial analyst and writer with over 15 years of experience in the finance industry. A graduate of the Wharton School of the University of Pennsylvania, Mark specializes in investment strategies, market analysis, and personal finance. His work has been featured in prominent publications like The Wall Street Journal, Bloomberg, and Forbes. Mark’s articles are known for their in-depth research, clear presentation, and actionable insights, making them highly valuable to readers seeking reliable financial advice. He stays updated on the latest trends and developments in the financial sector, regularly attending industry conferences and seminars. With a reputation for expertise, authoritativeness, and trustworthiness, Mark Eisenberg continues to contribute high-quality content that helps individuals and businesses make informed financial decisions.​⬤