Investing.com– Oil prices took a hit in Asian trade as industry data indicated a rise in U.S. oil inventories, with attention still on U.S. diplomatic efforts to ease tensions in the Middle East.
Crude prices had seen a slight increase in the previous session following reports of Israel’s actions in the region, but focus has now shifted to discussions between U.S. Secretary of State Antony Blinken and Israeli leaders regarding potential de-escalation.
Additionally, economic cues from China are being closely monitored due to concerns about slowing demand in the country.
Crude oil futures expiring in December fell 0.4% to $75.75 a barrel, while Brent crude fell 0.4% to $71.45 a barrel by 21:00 ET (01:00 GMT).
US Inventories Show Bigger-Than-Expected Build According to API Data
Data from the American Petroleum Institute (API) revealed a larger-than-expected increase of 1.643 million barrels in U.S. oil inventories, raising concerns about cooling fuel demand in the country.
This data typically foreshadows a similar trend in the Energy Information Administration (EIA) report, due later on Wednesday, adding pressure on oil prices.
Furthermore, recent strength in the U.S. dollar, driven by expectations of a smaller interest rate cut by the Federal Reserve, has also weighed on oil prices.
Oil Prices Expected to Hover Around $76/barrel in 2025, Says Goldman Sachs
Goldman Sachs analysts predict that oil prices will average around $76 a barrel in 2025, citing a moderate crude surplus and spare capacity in major producers as factors that could offset any supply disruptions.
Despite tensions in the Middle East, the investment bank believes the risk premium for crude is limited, as oil supplies from the region have not been significantly impacted so far.
Major producers within the Organization of Petroleum Exporting Countries (OPEC) and its allies are said to have sufficient spare capacity, with OPEC planning to increase production later this year after revising its oil demand forecast for 2024 and 2025.
Analysis: Oil prices are facing downward pressure due to rising U.S. inventories and concerns about weakening demand in China. The ongoing diplomatic efforts in the Middle East and the potential for increased production from major oil producers could help stabilize prices in the near future. Investors should keep a close eye on inventory reports and geopolitical developments to make informed decisions about their portfolios.