EBC Markets Briefing | Oil rally extends on declining inventories

Oil prices, little changed in early Asian trade on Friday, were on track to end higher for a second straight week following a large cut in US interest rates and declining global stockpiles.

The benchmarks have registered gains in five of the seven sessions since falling to near three-year lows. They were also being supported by rising tensions in the Middle East as Israel pushed ahead with assault on Rafah.

Hezbollah promised to retaliate against Israel after accusing it of detonating pagers across Lebanon, killing nine people and wounding nearly 3,000 others who included fighters and Iran's envoy to Beirut.

Crude inventories fell by 1.6 million barrels to a one-year low in the week ending 13 Sept, the EIA said, compared with analysts' expectations for a loss of 500,000 barrels.

A counter-seasonal oil market deficit of around 400,000 bpd will support Brent crude prices in the $70 to $75 a barrel range during the next quarter, Citi analysts said.

China has increased global demand for oil since the turn of the century, driven by its manufacturing sector. But its demand has fallen this summer amid an economic slowdown and the electric vehicles boom.

Brent crude has maintained its steady upside path, but the rally will likely halt around the support turned resistance around $75.

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