Oil prices steady as weak US demand offsets inventory decline

WEB DESK: Oil prices held their ground in Asian trading on Wednesday, keeping most of the gains from the previous session that were driven by US sanctions. Traders remained cautious as attention shifted to an OPEC+ meeting scheduled for the weekend.

Brent crude slipped just 1 cent to $69.13 a barrel by 0032 GMT, while US West Texas Intermediate rose 4 cents to $65.63.

The moves were modest compared to Tuesday’s rally, when prices jumped more than 1 percent after Washington unveiled new sanctions targeting a network of shipping companies and vessels accused of smuggling Iranian oil disguised as Iraqi exports.

Inventory draw supports prices

Market sentiment also drew support from expectations that US crude stockpiles declined last week. A Reuters poll of three analysts suggested inventories likely dropped by about 3.4 million barrels in the week ending August 29, along with decreases in gasoline and distillate supplies. Confirmation of the data is expected later this week.

Demand worries linger

Despite the positive signals, broader concerns about demand kept prices from climbing further. US manufacturing contracted for a sixth straight month, with tariffs introduced under President Donald Trump weighing on business confidence and activity. The slowdown raised doubts about how strong fuel consumption will remain in the coming months.

Focus on OPEC+

Traders are now awaiting the outcome of the September 7 meeting between eight OPEC members and their allies. Analysts widely believe the group will hold off on any new production changes for the time being, keeping the market steady but cautious.

Political backdrop adds to uncertainty

Geopolitics also loomed in the background. In Beijing, China staged its largest-ever military parade to mark 80 years since Japan’s defeat in World War Two. President Xi Jinping presided over the event, joined by Russia’s Vladimir Putin and North Korea’s Kim Jong Un.

The show of unity came just days after the Shanghai Cooperation Organisation summit, where China outlined its vision for a new global order. Analysts noted the shift could prompt Washington to consider further secondary sanctions, adding another layer of uncertainty for oil markets.

Read next: Gold prices hit fresh record as Fed rate cut bets grow