WTI inches higher to near $70.50 following drop in US Oil stocks

• WTI gained ground due to an unexpected drop in US Oil inventories.
• US Crude Oil Stock declined by 2.192 million barrels in the previous week, against the expected 2.3-million-barrel increase.
• Israel's military and the Shin Bet security service confirmed the killing of the militant leader Yahya Sinwar on Wednesday.

West Texas Intermediate (WTI) Oil price extends its gains for the second consecutive day, trading around $70.40 per barrel during Asian hours on Friday. The rise in crude Oil prices was supported by an unexpected drop in US Oil inventories.

According to the Energy Information Administration (EIA), US Crude Oil Stock fell by 2.192 million barrels in the week ending October 11, defying market expectations of a 2.3 million barrel increase and contrasting with the previous week's 5.81 million barrel rise.

In addition to the drop in US Oil inventories, rising tensions in the Middle East are providing further support for Oil prices. Israel's military and the Shin Bet security service confirmed on Thursday that Yahya Sinwar, the Gaza Strip Chief of the Palestinian Islamist group Hamas, was killed by Israeli forces during an operation in southern Gaza on Wednesday.

The killing of Sinwar has heightened concerns, especially among the families of Israeli hostages taken to Gaza by Hamas, who fear their loved ones may now be in greater danger following the killing of the militant leader, according to Reuters.

However, the upside potential for WTI Oil prices may be limited as the EIA report showed that US crude Oil production reached a record high of 13.5 million barrels per day last week. Additionally, Libyan Oil output has resumed, and the Organization of the Petroleum Exporting Countries and their allies (OPEC+) have plans to further unwind production cuts in 2025, as reported by Reuters.

On Tuesday, the International Energy Agency (IEA) indicated that the global Oil market is heading for a significant surplus in the coming year. While world Oil demand is expected to rise by 860,000 barrels per day in 2024, this is a downward revision of 40,000 barrels per day from the previous forecast. The IEA attributed this to slower economic growth in China and a shift toward electric vehicles, which have begun to reshape the Oil demand outlook for China, the world's largest Oil importer.