Oil prices dip on supply build expectations, Greenland tension
- Brent futures were down 12 cents, or 0.2%, to $64.80 a barrel
LONDON: Oil prices dipped on Wednesday as investors assessed expectations of a build in U.S. crude inventories, a temporary shutdown at two large fields in Kazakhstan and fresh geopolitical tension tied to U.S. tariff threats in its bid to gain control of Greenland.
Brent futures were down 12 cents, or 0.2%, to $64.80 a barrel at 1125 GMT. The U.S. West Texas Intermediate crude contract was down 11 cents, also 0.2%, at $60.25 a barrel.
Both contracts closed about 1.5% higher in the previous session after OPEC+ producer Kazakhstan halted output at the Tengiz and Korolev oilfields on Sunday due to power distribution issues. Strong Chinese economic data was also positive.
Oil production at the two Kazakh fields could be halted for another seven to 10 days, three industry sources told Reuters.
The oil output halt at Tengiz, one of the world’s largest oilfields, and Korolev is temporary, and downward pressure from an expected rise in U.S. crude inventories along with geopolitical tension will persist, IG market analyst Tony Sycamore said on Wednesday.
U.S. President Donald Trump said on Tuesday there was “no going back” on his goal to control Greenland. Last week he vowed to implement a wave of increasing tariffs on European allies until the U.S. is allowed to buy the Arctic island.
The increased geopolitical tensions, which add pressure to the oil markets as tariffs could slow economic growth, were adding to risk-off sentiment, said UBS analyst Giovanni Staunovo.
U.S. crude oil and gasoline stockpiles were expected to have risen last week, while distillate inventories likely fell, a preliminary Reuters poll showed on Tuesday.
Six analysts polled by Reuters estimated on average that crude inventories rose by about 1.7 million barrels in the week to January 16.
The American Petroleum Institute weekly inventory data is due at 4:30 p.m. EST (2130 GMT) on Wednesday, and figures from the Energy Information Administration, the statistical arm of the U.S. Department of Energy, are due at 12 p.m. EST (1700 GMT) on Thursday, both a day later due to a U.S. federal holiday on Monday.
While such inventory growth would be negative for oil prices, Gregory Brew, senior analyst with the Eurasia Group consultancy, said the potential for U.S.-Iran tensions to re-escalate would be supportive.
Trump threatened to strike Iran over its violent crackdown on anti-government protests earlier this month.
(Reporting by Stephanie Kelly in London, Katya Golubkova in Tokyo and Emily Chow in Singapore. Editing by Mark Potter, Kirsten Donovan)
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