NEW YORK: Oil prices edged up on Wednesday as a bigger-than-expected US crude storage withdrawal, Chinese economic stimulus and geopolitical tensions countered concerns over tepid demand.
Brent futures were up 15 cents, or 0.2%, to $79.70 a barrel at 10:38 a.m. EST (1538 GMT), while US West Texas Intermediate (WTI) crude was up 31 cents, or 0.45%, to $74.68.
In a move expected to shore up a fragile economic recovery, China’s central bank will cut the amount of cash that banks must hold as reserves from Feb. 5.
In the US, the Energy Information Administration (EIA) said energy firms pulled a much bigger-than-expected 9.2 million barrels of crude from stockpiles during the week ended Jan. 19.
That easily topped the 2.2-million barrel draw analysts forecast in a Reuters poll, and compares with the 6.7-million barrel decline seen in data from the American Petroleum Institute (API) industry group, a build of 0.5 million barrels in the same week last year and a five-year (2019-2023) average increase of 0.1 million barrels for the period. Geopolitical tensions, which have led to a massive displacement in global trade, remained in focus.
“Trade disruptions in the Red Sea add only a marginal premium to oil prices and no physical supplies have been lost so far, but regional escalation cannot be ruled out,” HSBC Global Research said in a note. A coalition of 24 nations led by the US and UK conducted new strikes against Houthi fighters in Yemen on Tuesday.
The strikes were aimed at stopping the Houthis’ attacks on global trade, Britain said in a joint statement. The US said Iran-aligned Houthis have mounted 26 attacks since late November on commercial shipping in the Red Sea, a shipping lane used by about 12% of global oil trade before the attacks.
The US also carried out strikes against Iran-linked militia in Iraq on Tuesday, following an attack on an Iraqi air base that wounded US forces.
Elsewhere in the Middle East, Israel and Hamas have made some progress toward agreement on a 30-day ceasefire in Gaza when Israeli hostages and Palestinian prisoners would be released, sources told Reuters, as Israel pressed ahead with its assault on southern Gaza’s main city.