On Wednesday, concerns about the escalation of the Middle East geopolitical situation and the shutdown of Libya's largest oil field boosted oil prices, and international oil prices rebounded slightly. After EIA data showed that crude oil demand is still healthy, the prices of WTI and Brent crude oil continued to rise, with daily increases of more than 3%, and WTI crude oil approached $75.
Data shows that EIA crude oil inventories in the US recorded a decrease of 3.728 million barrels in the week ending August 2, which is greater than the expected decrease of 0.7 million barrels, highlighting that US crude oil consumption is still strong.
Analyst Julia Fanzeres pointed out that US crude oil inventories have decreased on a large scale to the lowest level since February, and most of the inventory reductions come from the Gulf Coast and Midwest regions, offsetting the inventory increases in the East Coast and Cushing storage centers. This is the sixth consecutive week that US crude oil inventories have declined, the longest continuous decline since January 2022.
One of the reasons for the rise in the two benchmark oil prices is also due to concerns that the escalation of the tense situation in the Middle East, the main producer of global oil, may affect other regions and damage oil supply routes.
Iran and Lebanon's Hezbollah accused Israel of assassinating Hamas' political leader Hanniyeh and threatened to retaliate against Israel. Hanniyeh was assassinated in Tehran on July 31st.
US Defense Secretary Austin said on Tuesday that Washington believes Iranian-backed militias launched an attack on the Assad Air Force Base in Iraq, where US and British forces are stationed, the second largest US air force base in Iraq.
"The United States will not tolerate attacks on our people. We have adjusted our military posture to strengthen the protection of our forces, strengthen our firm commitment to Israeli defense, and prepare for any contingency," Austin said.
In addition, the conflict in the Red Sea, one of the world's most frequently used oil and fuel transportation routes, continues to support the rise in oil prices.
The US Central Command said in a statement on Tuesday that US forces have destroyed an Iranian-backed Houthi drone and two anti-ship ballistic missiles fired from Houthi-controlled Yemen in the past 24 hours.
To support the Gaza Strip, Houthi militants attacked Red Sea and Aden Gulf cargo ships carrying goods to and from Israel.
The suspension of production at Libya's largest oil field has exacerbated market supply concerns. The Sharara oil field in southern Libya has been hit hardest, with a daily production capacity of about 300,000 barrels, accounting for about one-third of the country's production.
Although the recent drop in oil prices in the global stock market sell-off, Goldman Sachs analyst Daan Struyven believes that oil prices are oversold, and the risk of supply interruptions due to the tense situation in the Middle East and the shutdown of Libyan oil fields may support Brent crude oil near $75. At the same time, the possibility of a US economic recession is limited.
Analyst Bruce Powers pointed out that WTI crude oil may have bottomed out, and if it breaks through the upper boundary of the convergent triangle, it will trigger a pullback. The first resistance zone is around $77.02, and the 20-day moving average near $79.14 will be the key to rising oil prices.
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