Global oil prices steady as Middle East tensions, demand worries weigh on markets

WEB DESK: Oil prices held steady during Asian trading on Wednesday, as investors balanced tensions in the Middle East with ongoing concerns over weak demand.

Brent crude futures saw a slight rise of 22 cents, or 0.3 per cent, reaching $77.4 per barrel by early morning (0349 GMT), while US West Texas Intermediate (WTI) increased by 14 cents to $73.71 a barrel.

Earlier, prices had dropped by over 4 per cent amid reports of a potential Hezbollah-Israel ceasefire. However, uncertainty remains, with fears of Israel launching attacks on Iran’s oil infrastructure still looming.

“The Middle East situation has traders constantly swinging between hope of peace talks and worry over further escalations,” said Priyanka Sachdeva, a senior market analyst at Phillip Nova. “This has distracted investors from focusing on the core factors affecting the oil market.”

Tuesday’s price drop followed a surge in oil prices that began after Iran fired missiles at Israel on October 1st. By Friday, oil had gained 8 per cent over the week, marking its largest increase in over a year.

In political developments, Hezbollah’s deputy leader Naim Qassem signalled a shift by supporting efforts for a ceasefire in Lebanon, without mentioning a truce in Gaza as a prerequisite for peace—a first in the ongoing conflict.

On the demand side, US crude oil stockpiles saw an unexpected rise of nearly 11 million barrels last week, much higher than analysts’ forecasts, according to data from the American Petroleum Institute. At the same time, fuel stockpiles dropped.

The US Energy Information Administration (EIA) also lowered its global oil demand growth forecast for 2024 by 20,000 barrels per day, bringing the total to 103.1 million bpd. Weaker industrial and manufacturing performance in both the US and China were key factors behind the reduced outlook.

Concerns over China’s economic recovery further dampened market sentiment, as the country’s officials gave few concrete details on potential stimulus measures during a press conference on Tuesday.

IG market strategist Yeap Jun Rong noted that while some had hoped for stronger fiscal policies similar to the major financial moves in late September, there was clear disappointment in the latest announcements.

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