Iran Threat Dwindles As Oil Traders Enthuse About Mixed U.S. Stock Draw Data

The nation's demand was deemed robust even though gasoline inventories climbed: File Image/Pixabay

Oil trading on Wednesday proved to be as unpredictable as ever, with a 2 percent-plus increase in prices (following declines in earlier sessions due to U.S. recession fears) triggered by stock draws in that country.

After the Energy Information Agency reported a sixth straight week of stocks dropping, this time by 3.7 million barrels for crude to 429.3 million barrels last week, West Texas Intermediate settled up $2.03, or 2.7 percent, to $75.23.

Brent settled up $1.85, or 2.4 percent, at $78.33 per barrel.

Phil Flynn, senior market analyst at Price Futures Group Inc., said, "This is starting to become a trend - the sixth week in a row crude has fallen and plays into the mantra that supplies are tightening and demand is exceeding supply."

However, the EIA also reported that gasoline stocks rose by 1.3 million barrels in the week to 225.1 million barrels, compared with expectations for a 1 million-barrel draw.

Even though the logic for Wednesday’s gains seemed shaky, more upside for crude alleviated the concern over Monday’s trading performance, which saw declines to a six-month low.

Tim Snyder, chief economist at Matador Economics, said, "The recovery we have gotten from the large downturn on Monday shows it was a very short-lived temper tantrum and not a market crash."

As for the overriding worry this week that Iran would stage a retaliatory strike on Israel for assassinations of Hezbollah and Hamas leaders, Iran’s president hinted at a diplomatic path to de-escalation while talking to French president Emmanuel Macron.

According to a note issued by Goldman Sachs, Brent should maintain a floor of $75 per barrel and will find support as the bank believes the risk of a recession is limited and oil demand is strong in the West and solid in India.

Meanwhile, a possible influencer of oil trading later this week could be the continuation on Wednesday of a Ukrainian ground assault on Russian regions, forcing Russia to evacuate residents from Kursk territory.

The Moscow Times stated that the latest campaign by Ukraine is “larger in scale and more prepared than previous efforts”; the war is said to now be entering a new phase by expanding to the African front, with Moscow’s Wagner mercenaries using the continent in a flanking maneuover and Kyiv following.