Oil Mixed Despite Massive Stockpile Build As Optimism Brews Over Rate Hikes

Meanwhile, the IEA lowers its demand growth forecast for 2024: File Image/Pixabay

With little justification for the optimism apart from shifting sentiment, crude traders on Thursday caused one crude benchmark to rise, based partly on expectations that U.S. interest rates had peaked.

However, the gains were capped by the disclosure in the previous session that U.S. stockpiles had risen by a massive 10.2 million barrels in the last week to 424.2 million barrels.

Brent settled up 18 cents to $86.00, while West Texas Intermediate settled down 58 cents to $82.91.

Even thought the Federal Reserve and other world banks have warned that further rate increases are a near certainty before year-end, traders were emboldened on Thursday to assume the opposite thanks to data indicating that U.S. inflation was slowing.

As for the Israel/Hamas conflict that has influenced trading for the better part of the week, prince Abdulaziz bin Salman, energy minister for Saudi Arabia, told media that it was necessary to be "proactive" on stabilizing the oil market, given concerns that the conflict could disrupt supplies from the Middle East.

He said, "We are not magicians, it is hard to forecast what will happen on the market even in half a year."

Meanwhile, Alexander Novak, deputy prime minister of Russia, downplayed the effect of the conflict, pointing out that it had been factored into the current oil price and risk was not high.

In other oil related news on Thursday, the International Energy Agency contributed to the seemingly endless roster of near-term market predictions by lowering its oil demand growth forecast for 2024, due to harsher global economic conditions and energy efficiency progress; however, it raised its 2023 demand forecast to 2.3 million barrels per day (bpd) from an earlier forecast of 2.2 million (bpd).

Also on Thursday, the U.S. Treasury Department sanctioned two companies and blocked  ships accused of transporting Russian oil at prices above the cap instituted due to its invasion of Ukraine; this came after disclosures that Russia had built its own fleet of vessels to avoid the cap.