Oil prices steadied in Asian trading on Wednesday as traders balanced concerns over the ongoing Middle East conflict with persistent bearish market fundamentals.
Brent crude futures increased by 11 cents, or 0.14%, reaching $77.29 a barrel by 0223 GMT. Meanwhile, U.S. West Texas Intermediate futures rose by 3 cents to $73.60 a barrel, according to Reuters.
Prices had previously dropped more than 4% in the prior session due to speculation about a possible ceasefire between Hezbollah and Israel.
However, the market remains cautious regarding the potential for an Israeli strike on Iran’s oil infrastructure.
“We anticipate additional volatility as the market weighs bearish fundamentals against supply risk due to rising Middle East tensions,” Macquarie analysts said in a note.
The sell-off on Tuesday followed a rally that commenced after Iran launched a missile barrage at Israel on October 1, leading to an 8% gain for the week by Friday, marking the largest increase in over a year.
In terms of demand, data indicated that U.S. crude oil stocks increased by nearly 11 million barrels last week, significantly exceeding analysts’ expectations, according to sources citing American Petroleum Institute figures on Tuesday.
Weak demand trends continue to impact the fundamental outlook. The U.S. Energy Information Administration revised its 2024 forecast for global oil demand growth down by 20,000 barrels per day (bpd) to 103.1 million bpd, attributing the adjustment to weaker industrial production and manufacturing growth in both the U.S. and China.
