Written by Jeslyn Ra
SINGAPORE (Reuters) – Oil prices fell on Wednesday after industry data showed U.S. crude inventories had ballooned more than expected, but as Israel continued its attacks on Gaza and Lebanon. After that, the decline was limited as markets kept a close eye on diplomatic efforts in the Middle East.
Brent crude oil futures were down 50 cents, or 0.7%, at $75.54 a barrel by 0640 GMT. U.S. West Texas Intermediate crude oil futures fell 50 cents, or 0.7%, to $71.24 a barrel.
Crude oil futures rose in the previous two sessions of the week before settling.
“The market continues to await Israel’s response to the Iranian missile attack,” analysts at ING said Wednesday, pointing to Tuesday’s strength in stocks as a result of U.S. Secretary of State Antony Blinken’s recent visit to Israel. He added that this may be because he was unable to do so.
A senior State Department official said Mr. Blinken held “extended talks” with Israeli Prime Minister Benjamin Netanyahu and other senior Israeli leaders, urging them to further increase humanitarian aid to Gaza.
Israel also confirmed on Tuesday that it had killed Hashem Saffieddin, the heir apparent of late Hezbollah leader Hassan Nasrallah, who was killed last month in an Israeli attack targeting Iranian-backed Lebanese militant groups.
“Market participants are pricing in a prolonged conflict in the Middle East, and the ceasefire agreement could be at a standstill,” said Yep Jun Long, market strategist at IG.
“China’s recent economic stimulus measures may have some success in stabilizing the situation or even facilitate a more sustained recovery going forward, which could have a positive impact on oil demand. There is a certain gender,” Yep added.
Meanwhile, U.S. crude oil inventories rose by 1.64 million barrels last week, weighing on prices, market sources said citing American Petroleum Institute figures on Tuesday. Analysts polled by Reuters had expected crude oil inventories to rise by 300,000 barrels.
Official U.S. government oil inventory data is scheduled to be released Wednesday at 10:30 a.m. EDT (2:30 p.m. Japan time).
“As oil prices swing from oversold to overbought territory over short periods of time, we are unable to take positions on either side of the market,” Jim Ritterbusch of Ritterbusch & Associates in Florida said in a note. “It can be difficult to maintain.”
Goldman Sachs said on Tuesday that oil prices will average $76 a barrel in 2025, based on modest crude surpluses and spare capacity from OPEC+ producers, which groups the Organization of the Petroleum Exporting Countries and its Russia-led allies. He said he expected it.
(Reporting by Jeslyn Lerh in Singapore; Additional reporting by Laila Kearney in New York; Editing by Sonali Paul and Jamie Freed)
