Oil prices rose on Wednesday as Middle East tensions kept supply worries alive. A larger-than-expected draw in U.S. inventories added to signs of tightening conditions.
Oil prices rose on Wednesday as continued tensions in the Middle East kept markets largely on edge over persistent supply disruptions. A big draw in U.S. oil inventories underscored tightening conditions in the world's biggest fuel consumer.
U.S. West Texas Intermediate crude futures added 1.2% to $99.01 a barrel by 05:28 ET (09:28 GMT). Benchmark Brent futures gained 1.1% to $109.96 a barrel in the same period.
Netanyahu pushes for new strikes on Iran
Israeli Prime Minister Benjamin Netanyahu is pushing to resume large-scale strikes against Iran, the Financial Times reported on Wednesday. According to the FT, the plans for a major new offensive did not proceed after U.S. President Donald Trump called for no attacks on Iran before the November U.S. midterm elections.
More hostilities with Iran, which has effectively blocked the Strait of Hormuz since the conflict began in February, are likely to herald more disruptions in oil supplies from the Middle East. Meanwhile, Tehran ramped up its attacks on shipping through Hormuz in recent weeks.
On Tuesday, unconfirmed reports of a Qatar and Pakistan proposal to revive talks briefly sent oil prices down to $106 a barrel from $112. Brent later moved higher, however, as traders reacted to a report that Iran's president believes the U.S. will attack again if Iran negotiates.
U.S. inventories fall more than expected
Data from the American Petroleum Institute showed that U.S. oil inventories fell 4.93 million barrels in the week to October 16, much more than expectations for a 1.3 million barrel draw. The print follows two weeks of outsized draws.
Official inventory data is due later on Wednesday, and markets expect a 0.3 million barrel draw. The draws also come as the U.S. Strategic Petroleum Reserve sits at its lowest level in 44 years, following months of emergency releases.
Analyst David Morrison of Trade Nation warned in a note that as hostilities drag on and significant strategic reserves are no longer available, there is a danger that crude prices become unanchored.
Source: Investing.com
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