Crude Oil Prices Fail to Benefit from Middle East Tensions
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Crude oil prices, news and analysis:
- In a move that would normally boost crude oil prices, armed drones have struck two oil pumping stations in Saudi Arabia in the same week that Saudi oil tankers were attacked in the region.
- However, oil traders are paying more attention to news from the American Petroleum Institute (API) of a large surprise build in crude inventories of 8.6 million barrels in the week ending May 10.
US inventories of crude oil increased unexpectedly by 8.6 million barrels in the week to May 10, according to the API, in an announcement that will likely keep oil prices weak despite ongoing conflict in the Middle East.
Saudi Arabia said Tuesday that drones had hit oil pumping stations near its capital, Riyadh just two days after an attack on oil tankers off the coast of the United Arab Emirates – but the news had only a limited impact on crude prices, suggesting the path of least resistance is downwards.
Moreover, the International Energy Agency (IEA) said Wednesday that rising US output is filling the gap left by US sanctions on Iran and Venezuela that have restricted output from these two major exporters. It also said that global demand for crude in 2019 would be less than it had previously forecast.
Against this background, the price of US crude is again edging lower and could challenge trendline support around $61/barrel near-term.
US Crude Oil Price Chart, Hourly Timeframe (May 2-15, 2019)
Chart by IG (You can click on it for a larger image)
Looking ahead, the next focus for oil traders will be official inventory data later Wednesday from the US Department of Energy. Crude stockpiles are forecast to have fallen by 0.8 million barrels in the week ending May 10, after a drop of 4.0 million barrels the week before, but the API data suggest that a rise is not impossible.
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--- Written by Martin Essex, Analyst and Editor
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.