HOUSTON: Oil prices were steady on Wednesday as the escalating war between major oil producer Russia and Ukraine offset a rise in US crude and gasoline stocks.
Brent crude futures for January were down 4 cents, or 0.05%, at $73.27 a barrel by 10:43 a.m. EDT (1543 GMT). US West Texas Intermediate crude futures for December , due to expire on Wednesday, were up 26 cents, or 0.37%, at $69.65, while the more active WTI contract for January was up 2 cents, or 0.03%, at $69.26. US crude stocks and gasoline inventories rose and distillate stockpiles fell in the week ending Nov. 15, the Energy Information Administration said on Wednesday.
Crude inventories rose by 545,000 barrels to 430.3 million barrels last week, the EIA said, compared with analysts’ expectations in a Reuters poll for a 138,000-barrel rise. US gasoline stocks rose by 2.1 million barrels to 208.9 million barrels, compared with analysts’ expectations in a Reuters poll for a 900,000-barrel build. The escalating war between major oil producer Russia and Ukraine and subsequent concern around potential oil supply disruptions have kept a floor under prices this week.
This has put geopolitical risk back in the market, StoneX energy analyst Alex Hodes said in a note on Wednesday. “However, the concerns over additional sanctions or disruptions of Russian fuel or crude oil supplies appear misguided,” Hodes added, pointing to strong Russian fuel exports. Long positions in WTI have declined significantly despite the added geopolitical risk, according to Aegis Hedging associate Christian Drolshagen, with hedge funds holding only 50% of summer levels, per CFTC data.
“We may expect (Brent) oil prices to stay supported above the $70 level for now, as market participants continue to monitor the geopolitical developments,” said Yeap Jun Rong, market strategist at IG. On Tuesday, Ukraine used US-supplied ATACMS missiles to strike Russian territory for the first time, Moscow said, while Russian President Vladimir Putin lowered the bar for a possible nuclear attack.
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