Brent crude futures rose by 45 cents or 0.6% to $76.93 per barrel on Wednesday.
US West Texas Intermediate crude (WTI), which is also 0.6% higher, increased by 47 cents to $73.67 per barrel.
Brent crude is still near its lowest point in seven months despite this upward movement. This is due to ongoing concerns about weak demand in the United States and the possibility of a recession.
Oil prices are supported by Middle East tensions
Since Tuesday, the threat of an escalating conflict has supported oil prices.
As the region prepares for possible new attacks by Iran, and its allies following the death of senior members from militant groups Hamas & Hezbollah in the last week, there are concerns about supply disruptions.
US officials have been in constant communication with allies, including Secretary Antony Blinken. This is to prevent any further escalation.
Daniel Hynes, an analyst at ANZ, noted:
If the conflict escalates in the Middle East, there is a higher risk that supplies will be disrupted.
US and Chinese economic data impacts oil prices
Brent futures fell to their lowest level since January 1, while WTI futures reached their lowest point since February.
This drop was part of an overall stock market crash, which was sparked by fears of a possible US recession after weak employment data.
Tamas Varga, an oil broker at PVM, highlighted the unpredictability of the market.
The debate is whether the recent reversal of risk asset prices was a bottom-picking move before the selling continued, or if investors took the time to assess the long-term implications the US jobs data.
Chinese trade data also revealed that daily crude oil imports in July fell to their lowest levels since September 2022. US data also showed a sudden increase in crude oil and gasoline inventories.
According to sources on the market citing American Petroleum Institute data, crude oil, gasoline and distillate stocks in the US rose last week. The US Energy Information Administration will release its weekly inventory data on Wednesday at 10:30 am (1430 GMT).
Analysts’ views on future oil prices
David Morrison Senior Market Analyst, Trade Nation, spoke about the technical factors that influence WTI prices. He noted,
WTI front-month fell to its lowest point since mid-January on Monday. Since then, the low has been held and crude oil has managed to consolidate and rally modestly. The hourly chart shows a pickup in upward momentum. This will encourage those who hope that a bottom has been reached.
Morrison did, however, point out a potential resistance at $74, which would indicate a possible further drop or a sustained rally depending on the market’s reaction.
The fundamental outlook of oil prices is still influenced by the concerns about a slowing growth in demand.
Recent data from China showed a significant drop in its trade deficit, with daily crude imports falling to their lowest level in almost two years.
The combination of this with signs of a slowdown within the US economy has contributed to the downward pressure placed on oil prices.
This post Oil Prices Rise a Tiny Bit, But Still Near 7-Month Lows Amid Middle East Tensions, US Recession Fears may be modified as new developments unfold
This site is for entertainment only. Click here to read more
