On Monday, oil prices jumped on tightening global inventories and the impacts of OPEC+’s upcoming decision, which can potentially sway its markets.
West Texas Intermediate crude contracts for October delivery jumped by 0.71% to $75.36 per barrel. Also, Brent futures for November shipments rose by 0.55% to $78.58 a barrel on August 26’s Asian afternoon session.
Analysts stated that the Organization for Economic Cooperation and Development reported that crude and refined products commercial stocks are below the 10-year seasonal average. Specifically, the supplies, equating to 120 million barrels or 4.00%, hit their lowest oil deficit in almost two years.
Meanwhile, OPEC+’s vital decisions regarding whether to pursue their plans for increased production or retain current production levels are looming. Factors influencing the decision-making include global economic uncertainties, shifting oil demand outlooks, and lower inventories, mainly in the US.
In the past several weeks, US crude inventories have been moving downward due to a significant decline observed in July and August. Based on reports from the US Energy Information Administration, crude supplies plummeted by 36.6 million barrels in a span of eight weeks. It marks its second-largest depletion in the past decade.
Additionally, most of the decline occurred in the Gulf Coast region, wherein the 25-million-barrel drop exceeded the depletion rate for the period.
Middle East Escalation Fears Boosts Oil Prices
Oil extended its price gains amid fears regarding a significant spillover in conflicts between the Middle East and Gaza, potentially disrupting supplies.
On Sunday, Hezbollah fired hundreds of rocks and drones into Israel. Meanwhile, Israel’s military said it struck Lebanon with a hundred jets, aiming for a larger attack.
According to analysts, Israel’s pre-emptive strike to prevent an imminent attack from the political party could support oil as it expects to extend its rally.
Conversely, crude prices were lower last week amid a poor forecast for major economies, which pressured fuel demand.
