By Barani Krishnan
Investing.com - It’s back to the drawing board of weekly U.S. inventory data for oil traders as a sudden disappearance in Middle East risk premiums thrusts the market towards actual barrel counts.
West Texas Intermediate, the benchmark for U.S. crude, was up 40 cents, or 0.7%, at $58.48 per barrel by 12:00 PM ET (17:00 GMT). WTI struck a five-week low of $57.91 in the previous session.
Brent, the global benchmark for crude, was up 65 cents, or 1%, at $64.85.
WTI has lost about 4% since the start of 2020, while Brent has lost around 1.5%. If Tuesday’s rebound holds, it will be oil’s first settlement higher in six days.
Crude prices rocketed in the first week of the year as a U.S. drone strike killed top Iranian general Qassem Soleimani in Baghdad on Jan. 3, sparking fears of an all-out U.S.-Iran war.
Iran responded by firing missiles at U.S. airbases in Iraq. But those rockets didn’t kill any U.S. servicemen and President Donald Trump decided to stand down further escalations with Tehran. That dramatically eased tensions in the Middle East and crude prices as well.
Oil traders are likely to focus on upcoming weekly U.S. inventory data as “the risk premium in the market is zero,” said Scott Shelton, energy futures broker at ICAP (LON:NXGN) in Durham, N.C.
The market is awaiting crude, gasoline and distillate stockpiles numbers for the week ended Jan. 10, due from the U.S. Energy Information Administration on Wednesday.
Ahead of the EIA’s release, trade group American Petroleum Institute will issue its own weekly inventory snapshot that the market usually uses as guidance for the government data. The API numbers are due at 4:30 PM ET Tuesday.
In its last weekly report, the EIA said U.S. crude stockpiles rose by 1.2 million barrels for the week ended Jan. 3, versus market expectations for a decline of 3.6 million barrels. Gasoline inventories soared by 9.1 million barrels, compared with expectations for a rise of 2.7 million barrels. Distillate stockpiles climbed by 5.3 million barrels, versus forecasts for a build of 3.9 million barrels.
For the forthcoming EIA report, analysts are expecting a crude inventory decline of 750,000 barrels. Gasoline is expected to build by 4.0 million barrels while distillates are expected to grow by 650,000.