Oil prices saw an increase in Asian trade on Wednesday, bouncing back from the steep losses of the previous session. However, gains were limited as reports of an oversupply in U.S. inventories emerged.
On Tuesday, oil prices dropped by more than 4% following news of Hezbollah seeking a ceasefire with Israel, indicating a possible de-escalation in the Middle East conflict. Additionally, concerns over China’s lack of new stimulus measures for its slowing economy added pressure on oil prices.
Brent oil futures for December delivery rose 0.6% to $77.63 a barrel, while WTI crude rose 0.6% to $73.40 a barrel by 21:14 ET (01:14 GMT).
API Data Shows Significant Increase in US Oil Inventories
Data from the American Petroleum Institute revealed a substantial growth of 10.9 million barrels in U.S. oil inventories in the past week, surpassing expectations for a build of 1.95 million barrels. This raised concerns about cooling U.S. fuel demand, particularly in the wake of devastating hurricanes affecting the mid-South region.
Traders are closely monitoring any potential disruptions in oil supply from Hurricane Milton, a category-5 storm expected to make landfall in Florida this week.
Middle East Conflict and Ceasefire Talks Impact Oil Prices
Reports of Hezbollah calling for a ceasefire as Israel targets its leadership have added pressure on oil prices. However, the possibility of a de-escalation in the Middle East conflict, which has been a key support for oil prices, remains on the horizon.
Recent missile strikes by Iran and Hezbollah against Israel have heightened concerns about a potential escalation in the Israel-Hamas war, posing a threat to oil production in the region. Traders are also wary of Israel’s possible attacks on Iran’s oil facilities, which could further escalate tensions.
Analysis:
In summary, the fluctuation in oil prices can be attributed to geopolitical tensions in the Middle East, oversupply concerns in the U.S., and the impact of natural disasters on oil production. Investors should keep a close eye on developments in these areas to make informed decisions regarding their investments.