Oil Advance as Traders Weigh Geopolitical Risks, Rising Stockpiles
Oil rose for a third day as traders weighed escalating geopolitical risks against signs of increasing inventories in the US, the biggest consumer.
Global benchmark Brent approached $74 a barrel in London after Ukrainian forces this week carried out their first strike on a border region in Russia using Western-supplied missiles, while the Kremlin updated its nuclear doctrine to expand the conditions for using atomic weapons.
Russia said it’s prepared to discuss a potential cease-fire in Ukraine with US President-elect Donald Trump, even as the conflict intensifies on all fronts while the warring sides seek to strengthen their bargaining positions. Crude futures are up more than 3% since Friday.
Meanwhile, the American Petroleum Institute said that crude stockpiles expanded by 4.8 million barrels last week while fuel supplies fell, according to a document seen by Bloomberg. The US Energy Information Administration is scheduled to release its data later on Wednesday.
“The Ukraine war has roared back into importance for investment markets,” said John Evans, an analyst at PVM Oil Associates. “The oil market will once again enter into another bout of geopolitical versus supply push and pull.”
Oil prices have been buffeted by mixed signals on the two conflicts currently roiling world markets, and the prospect of a supply surplus next year. Still, implied volatility for Brent has trended lower since the middle of last month.
In the Middle East, the US has stepped up efforts to reach a cease-fire between Lebanese militant group Hezbollah and Israel before Joe Biden’s term ends as president, and Iran has agreed to stop producing uranium enriched near bomb-grade.
The International Energy Agency has warned that global oil markets face a sizeable surplus next year, even if the OPEC+ alliance doesn’t bring back curtailed production, amid faltering demand growth in China.
Brent for January settlement rose 0.5% to $73.64 as of 1:35 p.m. in London.
WTI for January delivery gained 0.6% to $69.64 a barrel.
The December contract, which expires Wednesday, traded at $69.90 a barrel.
Source : Bloomberg
