Large Stockpile Draw Fuels Oil Rise: Oil prices rose on Wednesday due to two major energy market events. The US, the world’s largest fuel consumer, saw its crude oil reserves plummet as a storm approached the Gulf of Mexico. Both affect the energy environment and oil prices. When all of these factors happened at once, purchasers became worried, raising oil prices.
Brent oil futures for October rose 29 cents, or 0.34 percent, to $85.78 a barrel at 06:35 GMT. After the October contract expired on Thursday, all eyes were on the November contract, which sells more. The November contract concluded at $85.22 a barrel, up 31 cents.
While everything was going on, WTI crude oil futures rose 37 cents, or 0.46%, to $81.53 per barrel. This rise is good. Unbelievably, the average U.S. oil price rose for the sixth straight day.
What happened on Tuesday raised Brent and WTI further. People were less anxious about interest rate hikes, lowering the dollar. This was owing to decreased U.S. job figures. This contributed to Brent and WTI rising simultaneously.
Data showing an 11.5 million-barrel decline in U.S. crude stocks in the week ending August 25 contributed to this upbeat outlook. According to the American Petroleum Institute. Better than pre-data research predicted.
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Polls predicted an average draw of 3.3 million barrels, but this is higher than projected. Fujitomi Securities Co. Ltd. analyst Toshitaka Tazawa said this larger-than-expected draw shows that people are still buying oil, which is positive for the world oil market.
Concerns about Hurricane Idalia led to a sharp surge in futures contracts and a decline in oil sales. The hurricane in the Gulf of Mexico, east of major US oil and gas producers, worries investors. Tazawa saw that Hurricane Idalia’s fears were driving market purchases.
The Energy Information Administration (EIA) claims the Gulf of Mexico coast is vital to energy production. The EIA reports that this region produces 15% of the US’s oil and 5% of its natural gas. Remember how crucial this area is. Leading oil company Chevron Corp. is moving some staff out of the Gulf region due to the hurricane. This matters. The company’s Gulf of Mexico sites kept manufacturing things.
Even if the foregoing causes boosted oil prices, fuel demand, and China’s convoluted economy kept them low. China has the world’s greatest oil use, making its economy difficult. Even though China’s economy improved in July, reversing the declining trend from June, Capital Economics analysts warn that if the government doesn’t provide significant support faster, the economy could worsen. Most likely due to the recent stabilization of output indicators, decisive initiatives are needed to keep the economy thriving.
Our Reader’s Queries
Why oil prices are rising?
According to Rob Thummel, managing director at Tortoise Capital, the recent events in the Red Sea are heightening geopolitical risk. As a result, oil prices are on the rise as traders evaluate the possibility of a supply disruption due to the increased geopolitical risk.
How many years of oil is left in the world?
The world’s oil reserves are currently at 46.6 times its annual consumption levels, which translates to approximately 47 years of oil left (excluding unproven reserves).
Did oil prices rise after US data shows tighter crude supply?
On Wednesday, oil prices saw an increase due to the U.S. government’s report of lower-than-anticipated crude supplies. However, concerns about the Chinese economy hindered further gains. Brent crude futures for October settled at $85.86 a barrel, rising by 37 cents.
Are oil prices expected to drop?
The US Energy Information Administration has recently revised its crude price forecasts for 2024, predicting a decrease of 8 cents/b to $77.99/b for WTI and $82.49/b for Brent. The agency also anticipates a further decline in prices in 2025 due to an increase in production that surpasses demand.