Oil futures rose Thursday, buoyed by the shutdown of Libya’s largest oil field and rising tensions around the Israel-Hamas war, as well as industry data showing a large drop in U.S. crude inventories.
Price action
-
West Texas Intermediate crude for February delivery
CL00,
+1.13% CL.1,
+1.13% CLG24,
+1.13%
rose 71 cents, or 1%, to $73.41 a barrel on the New York Mercantile Exchange. -
Brent crude for March delivery
BRN00,
+0.92% BRNH24,
+0.92% ,
the global benchmark, was up 62 cents, or 0.8%, at $78.87 a barrel on ICE Futures Europe.
Market drivers
Crude was on track for back-to-back gains, after bouncing in the previous session. Oil got a lift as protests shut down Libya’s Sharara oil field, which produces 300,000 barrels a day of crude.
Fears of a broader conflict in the Middle East were also on the rise after blasts in Iran killed 95 people and injured more than 200 at a ceremony marking the anniversary of the death of a senior Islamic Revolutionary Guard officer killed by a U.S. airstrike in 2020.
“While it is not clear who was behind the attack, it only adds to the growing tensions in the region,” said Warren Patterson and Ewa Manthey, analysts at ING, in a note.
Iran has multiple foes who could be behind the assault, including exile groups, militant organizations and state actors. While Israel has carried out attacks in Iran over its nuclear program, it has conducted targeted assassinations, not mass casualty bombings. A U.S. State Department spokesman said American officials had “no reason” to believe Israel was involved in Wednesday’s attack in Iran.
The attack comes against the backdrop of the Israel-Hamas war and fears of a wider conflict that could curtail crude supplies from the Middle East. Major shipping companies have suspended cargo shipments through the Red Sea following a series of drone and missile attacks by Iran-backed Houthi rebels in Yemen since the start of the war.
See: Red Sea crisis highlights ‘clear and present danger’ of wider war involving Iran
The American Petroleum Institute, an industry trade group, late Wednesday reported that U.S. crude inventories fell by 7.4 million barrels last week, according to a source citing the data, far larger than the draw expected by analysts when the U.S. Energy Information Administration releases official data Thursday morning.
The drop in crude inventories, however, was offset by a large rise in product inventories, with gasoline stocks up 6.9 million barrels and distillate supplies up 6.7 million barrels.
Analysts surveyed by S&P Global Commodity Insight, on average, expect the EIA to report that U.S. crude inventories fell 4 million barrels last week, with gasoline inventories up 2.3 million barrels and distillates up 2.6 million barrels.
—The Associated Press contributed.
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