Apr 26, 2024 (MarketLine via COMTEX) --
There was an overall increase in crude oil prices amid a volatile week of trading as global geopolitical risks outweighed sluggish business growth in the US. A new US financial aid for Ukraine, Israel, and Taiwan indicated the possibility of extended hostilities in the respective countries, and thus supported prices. Besides, the country also readied a fresh batch of sanctions on Iranian energy exports, thus potentially removing more crude from the global markets. Moreover, Israel prepared to launch a military operation in the last Hamas stronghold of Rafah in southern Gaza, thereby keeping the Middle East region on the boil. Nevertheless, the upside to prices was somewhat contained by easing Israel-Iran tensions after both the countries hinted an end to the direct attacks on each otheraEUR(TM)s territories. Besides, a monthly decline in manufacturing and business activity in the US also diminished the gains in prices during the week.
Some key factors that led to changes in crude oil prices this week are as follows:
Oil prices dipped on Monday, weighed down by prospects of easing tensions in the Middle East after Iran stated that it will not respond to Israeli strikes on the country. This statement negated the possibility of any crude supply disruptions from the Middle East. Prices also came under pressure from expectations of an increase in crude oil supply from the US as drillers added five oil-focused rigs during the week ending on April 19, 2024. However, the downside was somewhat mitigated by expectations of a protracted Russia-Ukraine conflict after the US House of Representatives approved a $61 billion military assistance for Ukraine. This bill also provides aid for Israel and Taiwan and is likely to be passed by the US Senate in the coming days.
- Oil prices gained on Tuesday, supported by expectations of the US announcing new sanctions on Iran’s oil and gas industry following its missile strikes on Israel. Although, the US has already sanctioned Iranian crude oil exports, the latest batch of restrictions might target tankers, ports, and refineries handling Iranian crude to ensure stricter enforcement. Besides, the US factory output reportedly fell to its lowest this year at 49.9 in April 2024, indicating a contraction in the sector. This raised hopes that the slowdown in manufacturing might prompt the US Federal Reserve to lower its benchmark rates, and thus gave additional support to prices.
- Oil prices declined slightly on Wednesday, weighed down by concerns over a slowdown in business activity in the US. The S&P Composite Purchasing Managers’ Index (PMI), which tracks productivity of the private sector, declined to 50.9 in April 2024, against an estimate of 52.1. It indicated a likely fall in the country’s energy consumption ahead of the summer driving season. Nevertheless, the crude stockpiles in the country fell by 6.4 million barrels for the week ending on April 19, 2024. This data from the US Energy Information Administration (EIA) limited the downside to prices.
- Oil prices rose again on Thursday and then extended gains on Friday, supported by the prevailing geopolitical risks in the Middle East as the Israel-Hamas conflict edged on towards the city of Rafah in south Gaza. As bulk of the Gaza population had migrated to this city during the initial days of this conflict, any military operation here could worsen the humanitarian issues in the region. Prices were also buoyed by signs of crude demand resurgence in the US following a large weekly draw in the country’s crude stockpiles. As per the Energy Information Administration (EIA), the US crude inventory declined by 6.4 million barrels for the week ending on April 19, 2024.
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COMTEX_452118342/2227/2024-05-09T09:47:31
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