OIL FUTURES: Crude edges up amid lower stocks, supply risks

Crude oil futures edged up in the morning European trading session, as markets took direction from declining stocks and the potential for further geopolitical disruption.

At 1224 GMT, the ICE March Brent futures contract was up 18 cents/b from the previous close at $73.97/b, while the NYMEX February light sweet crude contract was up 26 cents/b at $70.86/b.

Supportive indications from oil stocks did little to lift prices. US crude stocks continued to decline in the week ended Dec. 20, falling 4.24 million barrels to 416.78 million barrels as refinery demand remained strong, US Energy Information Administration data showed Dec. 27.

Crude stocks have tightened by 13.5 million barrels since the week ended Nov. 15.

The crude stock draw exceeded expectations, as analysts surveyed by S&P Global Commodity Insights Dec. 23 predicted inventories would decline by 3.3 million barrels.

Support from geopolitics appears to have run its course following Israeli strikes against Yemen's Houthi fighters. Yemen's western seaports of Hodeidah and Ras Isa were left "out of service" by an Israeli airstrike Dec. 26, according to Russian news agency Tass, as a recent flare-up in attacks has focused on energy infrastructure in Houthi strongholds.

In a Dec. 26 statement on Telegram, the Israel Defense Forces claimed that its fighter jets had hit the Yemeni ports of Hodeidah and Saleef and the Ras Kanatib power plant, in a targeted airstrike that also struck Sanaa International Airport.

According to S&P Global Commodities at Sea data, oil product flows into Hodeidah and Ras Isa have accounted for roughly half of Yemen's fuel imports in 2024, averaging more than 70,000 b/d in November.

There is further uncertainty for the region and for oil flows ahead as markets look to see what policies US President-elect Donald Trump forms regarding the Houthis' sponsor, Iran. "There will be tough talk with Iran, but with an eye toward a new deal -- perhaps wrapped in a broader understanding with China," analysts at S&P Global Commodity Insights said on Dec. 20.