SINGAPORE: Oil prices edged up on Wednesday, amid ongoing uncertainty surrounding the Middle East conflict, following a dip in the market due to demand concerns in the previous session, which pushed prices to their lowest level since early October.
Brent crude oil futures increased by 19 cents, or 0.3 percent, reaching $74.44 a barrel by 9:30 a.m. Saudi time. Meanwhile, US West Texas Intermediate crude futures saw a rise of 24 cents, or 0.3 percent, to $70.82 per barrel.
On Tuesday, oil prices dropped more than 4 percent, hitting a near two-week low, driven by a weaker demand outlook and a media report indicating that Israel would not attack Iranian nuclear and oil sites, thereby alleviating fears of supply disruptions.
Despite this, concerns remain over a potential escalation in the conflict between Israel and the Iran-backed militant group Hezbollah. The US expressed opposition to the scope of Israel’s air strikes in Beirut over the past few weeks.
“After the recent price decline, we might see some stabilization in the near term as market participants reassess geopolitical developments,” said Yeap Jun Rong, market strategist at IG.
“Further clarity on China’s fiscal policy is also awaited, and the lack of specifics is casting some uncertainty over the eventual impact on its oil demand outlook,” Yeap added.
Reports suggest that China may issue an additional 6 trillion yuan ($850 billion) in special treasury bonds over three years to boost its struggling economy. However, this news did not lift sentiment in the country’s stock market.
On the demand front, both OPEC and the International Energy Agency recently lowered their forecasts for global oil demand growth in 2024, with China being the primary contributor to these downgrades.
For now, market attention will focus on the latest US oil inventory data. The American Petroleum Institute’s weekly report is due later on Wednesday, followed by the Energy Information Administration’s data on Thursday. These reports are delayed by a day due to a federal holiday.
Analysts surveyed by Reuters anticipate that crude stockpiles increased by approximately 1.8 million barrels in the week ending Oct. 11.
