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Crude oil futures resumed their upward march on Wednesday after back-to-back daily losses, triggered in part by reports that the United States believes an attack on Israel by Iran and its proxies is imminent.
Futures were going up and down in choppy trading after hotter-than-expected US inflation data tempered expectations of interest rate cuts by the Federal Reserve, as well as data showing a large increase in US crude oil inventories.
Iran’s Supreme Leader Ayatollah Ali Khamenei reiterated a pledge to retaliate against Israel for last week’s attack in Syria that killed senior Iranian military officers, which he said amounted to an attack on Iranian territory.
“The headline that the US expects a missile attack by Iran and its proxies has caused a market reversal… so the market is putting the risk premium back into prices,” the Price Futures analyst Phil Flynn.
“Oil’s next move will now depend on what kind of response Iran has” and whether the potential escalation will disrupt global oil supplies, UBS analyst Giovanni Staunovo said.
UBS also raised its forecasts for both Brent and WTI crude by $5 a barrel from previous estimates, saying it now sees oil benchmarks at $85-95 a barrel and $80-90 a barrel, respectively. barrel, based on higher estimates for oil demand growth. in 2024 and expectations that market conditions should allow OPEC+ to begin tapering voluntary production cuts this summer.
Front-month Nymex crude oil (CL1:COM) for May delivery has been established +1.1% at $86.21/barrel, and first-month June Brent crude (CO1:COM) ended +1.2% at $90.48/barrel.
ETFs: (NYSEARCA:USE), (BNO), (UCO), (SCO), (USL), (DBO), (DRIP), (GUSH), (NRGU), (USOI).
Oil prices had fallen in early trading after the US Energy Information Administration reported that crude oil and fuel inventories had risen much more than expected due to weak demand and falling oil exports.
U.S. crude inventories rose by 5.8 million barrels in the week ending April 5, about double the expected increase, while refined product inventories rose unexpectedly with gasoline rising 700,000 barrels and crude oil inventories distillates of 1.7 million barrels.
According to new data from the Bureau of Labor Statistics, U.S. electricity and gasoline prices rose sharply in March, with electricity rising 0.9% and gasoline rising 1.7%, bringing the energy sector to far outpace broader inflation in the month.
Energy prices – which include electricity, gasoline, fuel oil and other energy- and oil-related goods and services – rose 1.1% in March compared with a 0.4% increase in the broader index of consumer prices.