Three-Day Rise In Oil Prices Proves No Escape For Range-Bound Status

by Ship & Bunker News Team
Wednesday February 7, 2024

For the third time in as many days, oil prices on Wednesday increased modestly due to geopolitical tensions and stock draws – but the commodity remained stubbornly range bound.

Brent settled up 62 cents, or 0.79 percent, at $79.21 per barrel, while West Texas Intermediate settled up 55 cents, or 0.75 percent, to $73.86.

The U.S. Energy Information Administration once more issued mixed signals regarding demand in that country by reporting that gasoline stocks fell by 3.15 million barrels last week compared with expectations for a 140,000 barrel build; also, distillates fell 3.2 million barrels compared with expectations for a 1 million barrel draw.

But crude stocks climbed by 5.5 million barrels instead of an expected 1.9 million barrel build due to production recovering from a cold snap in some states.

The EIA also offered its prognosis for domestic production in the months ahead, stating it will briefly return 13.3 million barrels per day (bpd) in February, decline through the middle of the year, and not exceed the record of 13.3 million bpd until February 2025.

Meanwhile, a focus was maintained on the Middle East after Israel rejected a ceasefire offer from Hamas and claimed that total victory over the militants was within reach.

Timothy Snyder, economist at Matador, noted that markets are in a state of confusion, but not due to stockpiles or war; instead, central banks with regard to interest rates "are now waiting too long to ease, adding an additional element of risk back into the market."

For its part, Bloomberg remarked that Wednesday's trading saw prices briefly reach $74, which triggered selling among trend-following algorithms, but "even with the swings, futures remained in the roughly $5 channel where they've spent most of this year."

Keshav Lohiya, founder of Oilytics, said, "It continues to remain a narrow, range-driven market for crude; one of the biggest reasons behind the oil markets absorbing all these geopolitical risk premiums has been the silent supply growth from non-OPEC countries."