Oil rally extends on declining inventories
2024-09-20
Summary:
Oil prices were steady in early Asian trade on Friday, set to rise for a second week due to a US interest rate cut and declining global stockpiles.
Oil prices, little changed in early Asian trade on Friday, were on track to end higher for a second straight week following a large cut in US interest rates and declining global stockpiles.
The benchmarks have registered gains in five of the seven sessions since falling to near three-year lows. They were also being supported by rising tensions in the Middle East as Israel pushed ahead with assault on Rafah.
Hezbollah promised to retaliate against Israel after accusing it of detonating pagers across Lebanon, killing nine people and wounding nearly 3,000 others who included fighters and Iran's envoy to Beirut.
Crude inventories fell by 1.6 million barrels to a one-year low in the week ending 13 Sept, the EIA said, compared with analysts' expectations for a loss of 500,000 barrels.
A counter-seasonal oil market deficit of around 400,000 bpd will support Brent crude prices in the $70 to $75 a barrel range during the next quarter, Citi analysts said.
China has increased global demand for oil since the turn of the century, driven by its manufacturing sector. But its demand has fallen this summer amid an economic slowdown and the electric vehicles boom.
Brent crude has maintained its steady upside path, but the rally will likely halt around the support turned resistance around $75.
Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
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