Oil futures: Crude rebounds, Middle East offsets Venezuelan sanctions
Quantum Commodity Intelligence – Crude oil futures late Thursday moved into positive territory after spending most of the session lower after the US confirmed a suspension of Venezuelan oil sanctions, as geopolitical tensions continued to dominate amid concerns over a potential escalation in the Middle East conflict.
Front-month Dec23 ICE Brent futures were trading at $91.86/b (1650 GMT), compared to Wednesday's settle of $91.50/b and having rebounded strongly from the day's low of $89.57/b.
At the same time Dec23 NYMEX WTI was trading $87.93/b versus Wednesday's settle of $87.27/b, while Nov23 was trading $88.90/b on thin volumes heading into the expiry.
While the conflict has been mostly contained to Gaza amid ongoing diplomacy efforts, Lebanon has warned Israel of "uncontrollable escalation" as protests broke out across a number of regional countries.
The Israeli military also said there has been a "significant escalation" by Hezbollah forces at the Lebanon border, while skirmishes in the West Bank have been reported.
Iran's call for an oil boycott against Israel received a muted reaction, with no sign of OPEC+ members going in that direction for now, but analysts said such a move would have little impact on the market.
"Israel is a relatively small oil importer, importing a little over 200,000 bpd with the two largest suppliers being Kazakhstan and Azerbaijan at the moment. If we were to see a disruption to these flows, given the relatively small volumes, Israel should be able to quite easily find alternatives," said Warren Patterson, head of ING's commodity research.
Venezuela
Meanwhile, prices eased slightly after the US confirmed a temporary lifting of sanctions against Venezuela, although it was unclear how quickly the former oil heavyweight could ramp up output.
Any short-term boost is likely to be limited to 200,000 bpd at best, said analysts.
OPEC officials also said that the easing of oil sanctions against the OPEC member was unlikely to require any policy changes from the wider OPEC+ group, while OPEC does not expect any significant price movement.
This week's EIA data was largely supportive, with the 4.5-million-barrel drop in US crude stocks exacerbated by stocks at the key storage hub of Cushing falling to their lowest level since October 2014.
Inventories in Cushing, where the NYMEX WTI futures contract specifies delivery, slipped by 760,000 barrels to a nine-year low of 21million barrels, which analysts have warned is close to minimum operational levels that are needed to keep volumes flowing efficiently and maintain the WTI quality.
Prices had also found midweek support after data showed China's crude oil throughputs rose for the fourth straight month to a new high of 15.48 million bpd in September.
Higher crude throughput dovetailed with a 4.9% year-on-year GDP growth in the third quarter, beating market expectations of 4.4%.
