Oil Prices Steady on Surprise Drop in US Crude

October 30, 2024

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Key Points:

• US crude inventories dropped by 573,000 barrels, while gasoline and distillates saw decreases of 282,000 and 1.46 million barrels respectively.
• Brent crude and WTI futures rose 0.3% as unexpected inventory declines buoyed prices after a 6% fall over the past two sessions.

Oil prices edged up on Wednesday as markets absorbed a surprise drawdown in US crude and fuel stocks, providing a buffer against recent losses spurred by potential diplomatic developments in the Middle East. 

Brent crude futures rose 21 cents, or 0.3%, reaching $71.33 per barrel, while US West Texas Intermediate (WTI) crude futures gained 22 cents, settling at $67.43 per barrel. This slight price recovery follows a sharp decline of over 6% in the prior two sessions.

See also: Oil prices dropped from 68.503 to 66.713 before stabilising around 67.453, with MACD showing consolidation on the VT Markets app.

API Reports Surprise Crude Drawdown, Eyes on EIA Data for Market Impact

Data released by the American Petroleum Institute (API) on Tuesday revealed a dip in US crude stockpiles by 573,000 barrels for the week ending October 25, defying analysts’ expectations of a 2.2 million-barrel increase.

Gasoline stocks fell by 282,000 barrels, and distillates saw a decrease of 1.46 million barrels, further tightening the supply picture. 

Market participants are closely watching for the official Energy Information Administration (EIA) data set for release later today, which could confirm or contradict API’s findings, and thus influence short-term price movements.

API Eases Oil Bulls as Middle East Tensions Cool

The API report provided some relief to oil bulls who saw prices drop steeply after media reports on Tuesday indicated that Israeli Prime Minister Benjamin Netanyahu was initiating diplomatic discussions, aiming for a potential resolution with Lebanon. 

The diplomatic turn cooled concerns of an extended Middle East conflict, which had contributed to oil’s recent volatility.

Adding to the downtrend, oil markets responded on Monday to news that Israeli strikes on Iranian targets over the weekend did not impact Tehran’s oil infrastructure, diminishing the likelihood of an immediate supply disruption.

See also: Oil Prices Lifted by U.S. Reserve Refill Plan

The API’s reported inventory reductions could imply a continued drawdown in US stockpiles, suggesting that demand may be outpacing supply—a factor supportive of short-term price stability.

However, with global tensions and economic uncertainties, traders may proceed with caution, especially as any further developments in Middle Eastern diplomacy could reintroduce volatility.

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