Crude oil is in a position to close higher for the week after posting a dramatic turnaround following last week’s sell-off, with prices surging by approximately 4%. The market was influenced by various factors, including escalating Middle East tensions, unexpected trends in U.S. fuel stocks, and developments in Russian oil exports. Brent crude breached the $80 per barrel mark, while WTI climbed above $75, a notable movement for the first time in February.
Middle East Tensions Heighten Supply Concerns
Central to this week’s market fluctuations is the escalating tension in the Middle East. Israel’s rejection of a ceasefire offer from Hamas heightened fears of a broader conflict, critically impacting the oil-rich region. The situation intensified with Israeli forces bombing the southern border city of Rafah, stirring market apprehensions about potential disruptions in one of the world's key oil-producing regions. Such geopolitical unrest is a classic trigger for oil price hikes, as traders anticipate potential supply chain disruptions.
US Refinery Trends and Inventory Shifts
In the U.S., the oil market received additional support from a stronger-than-expected drawdown in gasoline and middle-distillate stocks. This decline in fuel reserves, paired with a rise in crude stocks, indicates a tightening in refining capacity due to ongoing maintenance. The United States, being a significant consumer and producer of oil, sees such inventory trends…