Oil prices edge higher amid Middle East tensions
Oil prices ticked higher in early trading on Thursday, as investors weighed the escalating conflict in the Middle East against an abundance of supply in the global market.
Reuters news agency reported that as of 0006 GMT, Brent crude futures rose 64 cents (0.87%) to $74.54 per barrel, while U.S. West Texas Intermediate crude futures gained 72 cents (1.03%) to $70.82 per barrel.
However, an unexpected 3.9 million-barrel increase in U.S. crude inventories to 417 million barrels for the week ended September 27 tempered price gains, according to the Energy Information Administration. This exceeded analysts’ expectations of a 1.3-million-barrel draw.
“Swelling U.S. inventories added evidence that the market is well supplied and can withstand any disruptions,” ANZ analysts noted.
Despite concerns, some investors remain unfazed, citing sufficient global crude supplies and spare OPEC capacity. “After Iran’s attack, prices may stay elevated or remain more volatile for a little longer, but there’s enough production, there’s enough supply in the world,” said Jim Simpson, CEO of East Daley Analytics.
OPEC’s spare oil capacity can compensate for a full loss of Iranian supply if Israel disables its facilities. However, traders worry about potential retaliatory attacks on Gulf neighbors’ installations.