Oil prices edged higher on rising tensions in the Middle East

(1) Oil prices edged higher on Thursday amid concerns about an escalation in the Middle East and more attacks on ships in the Gaza Strip and the Red Sea, though an unexpected increase in U.S. crude inventories capped gains. (2) U.S. crude oil is currently up 0.82%, trading near $71.86 per barrel, and Brent crude is currently up 0.74%, trading near $77.37 per barrel. (3) U.S. crude inventories rose by about 1.3 million barrels to 432.4 million barrels in the week ended Jan. 5, the EIA said on Wednesday, compared with analysts' expectations for a decline of 700,000 barrels. (4) On Wednesday, Yemen's Houthi rebels launched their largest attack yet on commercial shipping lanes in the Red Sea. The United States and Britain have hinted that they will take further steps if the attacks continue, and the UN Security Council has also adopted a resolution calling for an immediate cessation of the attacks. (5) Yeap Jun Rong, market strategist at IG, said: "Oil prices seem to be in a state of indecision this week as market participants try to digest various factors. He pointed to geopolitical tensions in the Middle East, conflicting U.S. inventory reports, and slowing global economic growth. (6) Yeap said: "The EIA's latest data dampened the larger-than-expected decline in U.S. crude inventories reflected in yesterday's API data, which somewhat flattened earlier gains. ” (7) All eyes are now on U.S. inflation data that will influence perceptions of when the Fed is likely to cut interest rates. (8) Leon Li, an analyst at CMC Markets, said, "The unexpected increase in U.S. crude inventories has raised concerns about crude oil demand. But as the economic slowdown is slower than the Fed expects, a revision in rate cut expectations should support oil prices. Until we see more data showing more downward pressure on the economy, oil prices are likely to find support above $70. ” (9) China's General Administration of Customs will release trade data for December on Friday to reflect the overall demand of the world's largest oil importer for the whole year. Analysts expect the data to show that China's merchandise imports rose 0.3% year-on-year in December, following a 0.6% decline in November