Oil Prices Edge Higher After US Crude Stockpiles Drop

 | Thursday, October 17, 2024 | 3:27 PM EST

Oil edged higher after four sessions of declines as traders weighed falling US crude stockpiles and potential risks to production in the Middle East against underwhelming stimulus measures from China.

West Texas Intermediate steadied to settle near $71 a barrel, while Brent settled around $74 a barrel. Government figures released Thursday showed US crude inventories decreased by 2.19 million barrels. That was a steeper drop than projected by an industry group and compares with Bloomberg users’ projection of a 1.3 million-barrel gain.

The report helped arrest a slump driven by reports that Israel would avoid striking Iran’s crude facilities. Still, the conflict is showing little sign of abating, with Israel saying Hamas leader Yahya Sinwar was killed by the Israel Defense Forces. Israel has also stepped up air strikes on Lebanon, and US stealth bombers hit weapons storage sites linked to Iran-backed Houthi rebels in Yemen.

“Crude trading remains skittish as the market tries to interpret developments in the Middle East,” said Rebecca Babin, senior energy trader at CIBC Private Wealth Group.

Oil Prices:

• WTI for November delivery climbed 0.4% to settle at $70.67 a barrel.
• Brent for December settlement rose 0.3% to settle at $74.45 a barrel.

Increasingly bearish signals have partly overshadowed the turmoil in the Middle East. Rising production from outside OPEC and sluggish demand growth will lead to a “sizable surplus” next year, barring any major disruption to flows, the International Energy Agency said this week.

Meanwhile, commodity trading advisers, which largely rely on trend-following algorithms, briefly flipped to net long on Oct. 4, but have shifted back to net short in the last couple of trading sessions, according to data from Bridgeton Research Group. WTI is now positioned at 9% short compared to 64% short on Sept. 30, the group said.

Oil prices have made choppy moves throughout Thursday’s session. Crude briefly plummeted after dipping below $70 a barrel, a key technical and psychological number that triggered more selling, before recovering. Oil had climbed earlier in the session, then pared gains after China’s announced stimulus for the housing market fell short of expectations.