Oil futures were on track for a third straight rise Wednesday, with the global benchmark pushing back above $80 a barrel, as traders monitored tensions in the Red Sea that have led to disruptions to global trade.
Meanwhile, data from the U.S. government revealed weekly gains for domestic crude and petroleum-product supplies.
Price action
-
West Texas Intermediate crude for February delivery
CL.1,
+0.93% CL00,
+0.93% CLG24,
+0.93%
rose 67 cents, or 0.9%, to $74.61 a barrel on the New York Mercantile Exchange. -
February Brent crude
BRN00,
+0.85% BRNG24,
+0.85% ,
the global benchmark, was up $1, or 1.3%, at $80.23 a barrel on ICE Futures Europe. Brent and WTI oil were both poised to mark their highest settlements since Nov. 30, according to FactSet data. -
January gasoline
RBF24,
-0.31%
edge down by 0.1% to $2.1989 a gallon, while January heating oil
HOF24,
+0.91%
added 1.5% to $2.7555 a gallon. -
Natural gas for January delivery
NGF24,
+0.56%
traded at $2.512 per million British thermal units, up 0.8%.
Supply data
U.S. crude, gasoline and distillate supplies all climbed last week, according to data from the Energy Information Administration released Wednesday.
Domestic commercial crude inventories rose by 2.9 million barrels for the week ended Dec. 15.
On average, analysts polled by The Wall Street Journal expected the report to show a climb of 2.5 million barrels. The American Petroleum Institute late Tuesday reported that U.S. crude inventories rose 939,000 barrels last week, according to a source citing the data.
The EIA report also revealed supply increases of 2.7 million barrels for gasoline and 1.5 million barrels for distillates. Analysts had forecast supply increases of 700,000 barrels each for gasoline and distillates.
Crude stocks at the Cushing, Okla., Nymex delivery hub rose by 1.7 million barrels last week, the EIA said.
Red Sea shipping woes
Several shippers have suspended shipments through the Red Sea after a series of drone and missile attacks by Iran-backed Houthi rebels since the start of the Israel-Hamas war.
Read: Attacks in the Red Sea add to global shipping woes
The actions by the Houthi rebels to “disrupt international shipping lanes are not only an act of war but also an assault on the global economy,” said Phil Flynn, senior market analyst at The Price Futures Group. While the U.S. is setting up an international coalition to try to stop the piracy, “the question becomes whether they will go after Iran.”
On Tuesday, the U.S. announced the launch of an international naval effort to thwart the attacks.
See: Inflation worries return after Red Sea shipping attacks
“For the oil trade, it is a wake-up call,” said Flynn, in a daily report. “Last month, the market declared that war premium was unnecessary, but we are seeing that war premium forced back into the price.”
Still, in a note, Marios Hadjikyriacos, senior investment analyst at XM, said that it’s “questionable” whether such concerns over the disruptions to global trade will manage to keep oil prices supported for long, “against the backdrop of slowing demand next year coupled with record-high U.S. crude production.”
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