Oil Prices Stabilize as Traders Await Inventory Update

Oil futures remained steady early Wednesday as traders eagerly awaited the release of official U.S. petroleum inventory data. The market had previously responded to news from an industry group reporting a significant drop in crude stocks, but an increase in gasoline and distillate supplies.

Price Action

• West Texas Intermediate crude for February delivery (CL00, +0.18% CL.1, +0.18% CLG24, +0.18%) saw a marginal increase of 4 cents, or 0.1%, reaching $72.28 per barrel on the New York Mercantile Exchange.
• March Brent crude (BRN00, +0.09% BRNH24, +0.09%), the global benchmark, remained unchanged at $77.59 per barrel on ICE Futures Europe.

Market Drivers

Oil futures began stabilizing after a drop on Monday stimulated by Saudi Arabia's decision to reduce its official selling price for crude across all regions. However, Tuesday brought a rebound in prices as concerns of the Israel-Hamas conflict escalating into a larger-scale confrontation potentially impacting crude supplies from the Middle East were reignited. The Israeli military recently stated that it expects the war against Hamas to continue through 2024.

Late Tuesday, the American Petroleum Institute reported that U.S. crude inventories experienced a decline of 5.2 million barrels last week, as cited by an undisclosed source. In contrast, gasoline inventories rose by 4.9 million barrels and distillate stocks showed an increase of 6.9 million barrels.

Official inventory data from the Energy Information Administration is scheduled to be released on Wednesday morning.

According to analysts surveyed by S&P Global Commodity Insight, the average expectation for U.S. crude inventories in the week ending January 5 is a decrease of 900,000 barrels. Gasoline supplies are projected to rise by 4.9 million barrels, while distillate supplies are anticipated to increase by 3.7 million barrels.