Oil prices rose modestly in early Asian trading on Wednesday, rebounding from two-month lows as a report indicating a drop in U.S. crude stockpiles provided some relief to the market.
Brent crude futures gained 27 cents, or 0.4%, reaching $73.29 per barrel, while U.S. West Texas Intermediate (WTI) crude futures rose by 25 cents, or 0.4%, to $69.18 per barrel.
The uptick came after the American Petroleum Institute (API) reported that U.S. crude inventories fell by 640,000 barrels during the week ending February 21. Official data from the U.S. Energy Information Administration (EIA) is expected later on Wednesday. Analysts had forecast a 2.6-million-barrel increase in U.S. crude stocks for the same period, suggesting that the API data may have come as a surprise.
Despite this positive news, concerns over global oil supply continued to weigh on prices. On Tuesday, oil prices fell more than 2%, driven by worries about increasing supply and weak economic data from both the U.S. and Germany. Brent crude closed at its lowest point since December 23, and WTI settled at its lowest since December 10.
U.S. consumer confidence dropped sharply in February, marking the largest decline in over three years, while inflation expectations surged. Meanwhile, Germany’s economy contracted in the last quarter of 2024, further dampening sentiment.
Oil prices have also faced pressure from geopolitical factors, including U.S. President Donald Trump’s trade policies. Concerns over potential tariffs against China and other trading partners have raised fears about broader economic slowdowns, which could curb oil demand.
Nevertheless, the market remains cautious about future oil supply constraints, despite renewed sanctions on Iranian crude. While the U.S. sanctions are expected to reduce Iranian oil exports by up to 1 million barrels per day, analysts note that OPEC+ is preparing to increase output in the coming months, which could help offset the loss.
Additionally, the ongoing conflict in Ukraine remains a key factor for the global oil market. The U.S. and Ukraine recently finalized terms for a minerals deal, potentially signaling progress towards an end to the war. If the conflict concludes, it could pave the way for more Russian oil to flow into the market, further easing supply concerns.
In sum, while the API data provided some support for oil prices, the broader supply and economic concerns continue to dominate the market’s outlook.
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