• Crude Oil market climbed as geopolitical headlines squeeze barrel bids higher.
• EIA reported a steeper-than-expected decline in US crude barrel counts.
• MIlitary strikes against Houthi rebels are increasing supply line concerns.

West Texas Intermediate (WTI) US Crude Oil climbed to $74.00 per barrel on Thursday, rising after Crude Oil supplies in the US saw a steeper drawdown than markets expected according to barrel counts by the Energy Information Administration (EIA). Iran-backed Houthi rebels have vowed to step up attacks on civilian cargo ships passing through the Red Sea after an uptick in US-UK coalition naval strikes on Houthi-controlled missile launch sites in Yemen.

The EIA reported a 2.492 million barrel drawdown in US Crude Oil Stocks Change for the week ended January 12, a significant pullback from the market forecast of 313K and completely eating away at the previous week’s 1.338 million barrel buildup. Refinery demand has peaked as petroleum refiners scramble for more Crude Oil despite a growing overhang in downstream oil products, and US Crude Oil production output steadily rising into new all-time highs could limit topside momentum on hypothetical supply concerns.

Barrel traders focus on supply drawdown, cold weather production decline

Geopolitics continue to plague energy markets, with Crude Oil helped higher on the week by a notable uptick in violent rhetoric from Houthi rebels in Yemen after a wave of naval attacks on Houthi-controlled missile launch sites in Yemen. Despite the ongoing presence of US and UK coalition warships in the Red Sea, Houthis are vowing to continue or increase their attacks on civilian tankers trying to reach the Suez Canal instead of rerouting around the continent of Africa.

Crude Oil markets are increasingly concerned that Europe-Asia energy supply lines could become crimped as tensions and conflict escalate in the region.

Cold weather also saw a slight drawdown in US oil production, with the EIA estimating that US gasoline production average 9.4 million barrels per day for the week ended January 12 compared to 9.7 million bpd the week prior.

The EIA estimated that processed Gasoline reserves climbed by 3.1 million barrels for the week, with an additional 2.4 million barrel buildup in middle distillates adding to the previous week’s 6.5 million barrel supply increase.