The benchmark crude, WTI (CM:CL), is up marginally today as traders size up rising tensions in the Middle East and the build-up in U.S. oil stockpiles.
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Rising Uncertainty
Oil prices are rising following a warning from the U.S. about a potential strike by Iran on Israel. Additionally, the latest hotter-than-anticipated inflation print and buildup of U.S. crude oil stockpiles have introduced another dose of uncertainty in the picture.
Buildup in the U.S.
Earlier, data from the Energy Information Administration (EIA) showed a 5.8 million barrel increase in U.S. crude inventories for the week ending April 5. The previous week saw a buildup of 3.2 million barrels. Similarly, figures from the American Petroleum Institute (API) indicated a 3 million barrel rise in U.S. commercial stockpiles for the same week. These reports point to tepid demand and subdued exports during this period.
However, with turmoil escalating in the Middle East, traders are factoring in potential disruptions in the oil market. Moreover, the nearly two million barrels a day supply cuts from the OPEC+ ensure that supply remains tight. The demand for oil is largely expected to gather pace in H2 2024.
Is the Price of Oil Expected to Go Up?
The combination of these factors points to continued strength in oil prices over the coming periods. While oil has rallied by nearly 20% so far this year, the TipRanks Technical Analysis tool continues to flash Strong Buy signals for oil.
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