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Oil Prices edge Higher Amidst Middle East Tension

Oil prices edged higher today amidst tensions in the Middle East after the Yemen-based Houthi movement said it fired missiles on Saudi oil sites and an expected drawdown in crude inventory in the United States.

Brent crude futures were up 9 cents, or 0.1%, at $63.37 a barrel by 0055 GMT. 

U.S. crude futures gained 11 cents, or 0.2%, to $59.81 a barrel.

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Despite the challenges faced, crude prices have remained rangebound in the past three weeks. The slow rate of vaccinations balances growing expectations of surging economic activity in the U.S. and China in Europe and anticipation of additional oil supply from Iran in the coming months.

China’s exports grew remarkably in March in yet another boost to the nation’s economic recovery as global demand picks up while import growth surged to the highest in four years.

Crude oil imports into China also jumped 21% in March from a low base of comparison a year earlier as refiners ramped up operation amid robust fuel demand as the COVID-19 pandemic eased.

U.S. crude stockpiles were expected to have dropped last week for a third straight week, while distillate and gasoline inventories likely grew. However, the U.S. oil output from seven major shale formations is expected to rise for a third consecutive month, climbing by about 13,000 barrels per day (BPD) in May to 7.61 million BPD, the U.S. Energy Information Administration said on Monday.

“Crude oil prices struggled to break out of the recent trading range amid an uncertain outlook for the market,” ANZ Research Analysts. 

On Monday, Yemen’s Iran-aligned Houthi movement said it had fired 17 drones and two ballistic missiles at targets in Saudi Arabia, including Saudi Aramco facilities in Jubail and Jeddah. There was no immediate Saudi confirmation. 

However, analyst said that the attacks rarely cause any disruption to supply, and prices subsequently give back most of the gains throughout the session.

Read also: Oil Prices Gain, as Fed Jerome Powell Points to Economic Growth.

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