Oil prices showed little movement on Wednesday following a significant decline in the previous session, which ended a three-day period of gains. Concerns over potential supply disruptions from the Middle East and North Africa, combined with global fuel demand worries, continue to influence the market.
As of 0653 GMT, Brent crude futures were up by 8 cents, reaching $79.63 per barrel, while U.S. West Texas Intermediate (WTI) crude futures increased by 7 cents to $75.60 per barrel.
Tuesday’s price drop of over 2% interrupted a three-day surge of more than 7%. The decline was attributed to concerns about low refinery profit margins and weaker-than-expected global consumption growth.
Support for prices came from a reduction in U.S. oil and fuel inventories last week. However, risks such as potential Libyan oil output losses and the ongoing Israel-Gaza conflict, which could involve Iranian-backed Hezbollah militants, remain significant.
ANZ analysts highlighted ongoing geopolitical risks in a note on Wednesday. Oil production in Libya has been disrupted due to a dispute between rival government factions over control of oil resources, putting about 1.2 million barrels per day at risk. Although no official confirmation has been received from the Tripoli-based government or the National Oil Corp (NOC), local engineers reported halted and reduced output at several oilfields.
In the Gaza Strip, fighting between Israel and Hamas continues, and recent exchanges of fire between Israel and Hezbollah have further strained ceasefire negotiations. ANZ noted that while both parties have temporarily halted military operations, market concerns persist.
U.S. crude oil inventories fell by 3.407 million barrels for the week ending August 23. Gasoline and distillate inventories also decreased. The U.S. Energy Information Administration (EIA) is expected to release further storage data later on Wednesday.
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