Oil Prices Edge Higher on Lower-than-Expected Rise in U.S. Crude Stocks
Encouraging Industry Data
Oil prices continued to rise for the third consecutive day, buoyed by industry data that revealed a lower-than-expected increase in U.S. crude stocks. The U.S. also sharply reduced its forecast for the country’s oil output growth, alleviating concerns about potential oversupply.
Market Movement
On Wednesday, oil futures rose 16 cents to $78.75 a barrel, while U.S. West Texas Intermediate crude climbed 20 cents to $73.51. These gains were driven by the American Petroleum Institute’s report, which showed that stocks grew by only 670,000 barrels in the week to Feb. 2, significantly below analysts’ forecasts.
Government Data and Outlook
The U.S. Energy Information Administration (EIA) also revised its outlook for domestic oil output growth, projecting an increase of 170,000 barrels per day, a substantial decrease from the previous year. The EIA’s forecast indicated that U.S. production would not surpass the December 2023 record until February 2025, strengthening the case for a balanced oil market in 2024.
Geopolitical Developments
Meanwhile, mediators from the U.S., Qatar, and Egypt were preparing to bridge differences between Israel and Hamas regarding a ceasefire plan for Gaza. The situation in the Middle East, particularly the attacks on shipping by Iranian-backed Houthi rebels in the Red Sea, has also been closely monitored, as it has disrupted traffic through the Suez Canal.
Impact on Oil Supply
Despite the geopolitical tensions, oil supply has been bolstered by a consortium led by Exxon Mobil, which has increased oil production in Guyana to approximately 645,000 barrels per day, up from about 400,000 barrels per day in late 2023.
Overall, the oil market has shown resilience in the face of various challenges, and the outlook remains positive for the industry.
