Missile Attack Boosts Oil Prices As Trading Reaches Upper End Of 2024 Range

by Ship & Bunker News Team
Thursday February 22, 2024

A missile attack off the coast of Yemen stoked geopolitical fears on Thursday and led to oil prices rising minimally, while a large build in U.S. stockpiles reinforced the commodity's now chronic range bound status.

Brent was up 51 cents to $83.54 per barrel at 1649 GMT, while West Texas Intermediate climbed 64 cents to $78.55 per barrel.

British maritime agencies reported that the two missiles fired by Houthi militants caused a fire onboard the vessel, thus maintaining the elevated level of the geopolitical risk premium – even though there continues to be no evidence that either the Israel/Hamas war or Houthi support for Palestine has affected the physical market.

Meanwhile, figures from the U.S. Energy Information Administration revealed that crude inventories rose by 3.5 million barrels to 442.9 million barrels in the week ending Feb. 16, slightly less than the 3.9 million barrel rise predicted in a media poll.

Bloomberg continued to be a minority voice interpreting this and other data positively: "Timespreads are signalling a more robust market, and gauges of crude supply balances at the delivery point for US futures at Cushing, Oklahoma, have also soared…..both measures are in a bullish pattern indicative of tight near-term supplies."

The news agency added, "Crude is trading near the upper end of this year's range as investors weigh a subdued demand outlook for top importer China against rising geopolitical risks in the Middle East and disruptions in the Red Sea."

Giovanni Staunovo, a strategist at UBS, said, "We retain a modestly positive outlook as we expect the oil market to remain slightly undersupplied this year," and he cited as one factor the exports from the Organization of the Petroleum Exporting Countries down about 900,000 barrels in February, the lowest level since August of 2023.

In other oil news on Thursday, Chord Energy and Enerplus announced an $11 billion merger to create a premier position in the Williston Basin in North Dakota and Montana, with low-cost inventory, around 1.3 million net acres, and combined Q4 23 production of 287,000 barrels of oil equivalent per day.

The merger follows ExxonMobil, Chevron, Occidental, and other big players announcing acquisitions since the fourth quarter of 2023.