Oil prices had bumpy ride on Thursday. Crude was on the decline at 9am in the morning, but the bounce in US stocks pulled oil out of sessions lows. The bounce did not last long and by 2pm West Texas Intermediate was trading below $69 with Brent holding on to gains a little better at $79.67.
Oil prices are caught between supply concerns triggered by geopolitics and rising stockpiles in the US with a possible supply rise by other major producers. The US sanctions against Iran boosted prices even as the Trump administration tried to convince OPEC members to drive costs down. The latest diplomatic turmoil surrounding missing journalist Jamal Khashoggi puts Saudi Arabia under intense focus from global leaders.
US weekly inventories released by the Energy Information Administration (EIA) on Wednesday showed a larger than expected buildup that further depreciated oil prices. Growth concerns as trade disputes are not resolved have started to impact energy demand even as supply is tighter.
Weather and geopolitics have been the main factors behind supply disruptions, and without a significant change upward to demand, crude will be more sensitive to political events, specially if it’s based on a major producer.