After shedding gains on Wednesday following a U.S. crude inventory build and the Biden administration’s suggestion that a Gaza ceasefire deal could halt an Iranian attack on Israel, prices are now reversing again, with WTI gaining nearly 2% and Brent solidly back above the $80 mark.
At 12:16 p.m. ET on Thursday, U.S. benchmark West Texas Intermediate (WTI) was trading up 1.81% at $78.37 per barrel, while Brent crude was trading up 1.86% at $81.24.
Despite data showing a surprise U.S. inventory build, U.S. economic data appears to be easing fears of recession, with U.S. retail sales rising more than expected in July, and a smaller-than-expected increase in unemployment benefit applications. Markets have had difficulty digesting new economic and inventory data, and balancing this with intensifying geopolitical risk. On Tuesday, the American Petroleum Institute (API) reported a draw in U.S. crude oil inventories, only to be contradicted the following day by the Energy Information Administration (EIA), which reported a surprise build, putting downward pressure on prices.
On the geopolitical front, new Gaza ceasefire talks got underway on Thursday in Doha, Qatar–but without Hamas in attendance.
As the Gaza death toll reaches 40,000, with another 90,000 people injured, Israeli intelligence is meeting behind closed doors with U.S. and Egyptian intelligence and the prime minister of Qatar. This is happening against the backdrop of a deployment of U.S. warships to the region, while the Biden administration is hoping that the talks launched today could prevent a regional war. Hamas has refused to attend the talks but has indicated that it will be speaking with the negotiating team after the talks, Reuters reported.
On the fundamentals side, the EIA on Wednesday reported a 1.4-billion-barrel increase in stockpiles for the week ended August 9, compared to a 3.7-million-barrel drawdown from the previous week. The EIA report came a day after the API reported a 5.2-million barrel draw in stockpiles.
By Michael Kern for Oilprice.com
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