Brent crude oil prices slid towards $73 per barrel following a nearly 3% increase over the past two days, while West Texas Intermediate (WTI) hovered around $71. The recent American Petroleum Institute (API) report indicated a rise in crude inventories by nearly 2 million barrels last week, with significant increases in gasoline and distillates stocks, according to sources familiar with the data. Conversely, oil stockpiles at the Cushing hub saw a decline.
In the Middle East, Hezbollah has accused Israel of orchestrating a deadly attack involving pagers in Lebanon, which resulted in several fatalities and thousands of injuries. This development has heightened fears of an extensive regional conflict, which contributed to the recent uptick in oil prices.
Despite these concerns, Yeap Jun Rong, a market strategist at IG Asia Pte in Singapore, noted that while the market sentiment remains largely negative, “extreme bearish sentiments are attempting to unwind.” The recent unrest in Lebanon has reintroduced uncertainty about the potential for a broader conflict, which could disrupt oil supplies.
Year-to-date, crude oil prices have remained significantly lower, impacted by China’s weak demand outlook and OPEC+ plans to potentially reinstate previously cut supply. However, expectations regarding US monetary policy, with potential interest rate cuts anticipated later this Wednesday, are providing some support to the market, though opinions vary on the extent of the reduction.
In Europe, declining profits have led some refineries to cut back on processing rates, reflecting weaker demand. Meanwhile, in China, the world’s largest oil importer, poor refining margins have led to the bankruptcy of two smaller oil processing plants.
