Oil prices saw a slight uptick on Wednesday, with Brent crude futures rising by 45 cents, or 0.6%, to $76.93 a barrel.Meanwhile, US West Texas Intermediate (WTI) crude increased by 47 cents, also 0.6%, to $73.67 a barrel.Despite this upward movement, Brent crude remains near its lowest level in seven months, pressured by ongoing concerns over weak demand and the potential for a recession in the United States.
Middle East tensions provide some support for oil pricesThe threat of escalating conflict in the Middle East has provided some support to oil prices since Tuesday.Concerns over supply disruptions emerged as the region braces for potential new attacks by Iran and its allies, following the killing of senior members of militant groups Hamas and Hezbollah last week.US officials, including Secretary of State Antony Blinken, have been in constant contact with allies to prevent any escalation.ANZ analyst Daniel Hynes noted,
Any escalation of the conflict in the Middle East could see a greater risk of disruptions to supplies from the region.
US and Chinese economic data impact oil prices
Earlier in the week, Brent futures had slumped to their lowest since early January, while WTI futures hit their lowest since February.This decline was part of a broader stock market rout, driven by concerns of a potential US recession following weak jobs data.Tamas Varga of oil broker PVM highlighted the uncertainty in the market, stating,
Whether the reversal in risk asset prices will prove to be a mere bottom-picking before the sell-off continues or investors have taken the time to thoroughly assess the medium-term implications of the US job data is open for debate.
Adding to the bearish outlook, Chinese trade data revealed that July daily crude oil imports fell to their lowest level since September 2022. Additionally, US data showed an unexpected build in crude oil and gasoline inventories.Market sources citing American Petroleum Institute figures on Tuesday reported that US crude oil, gasoline, and distillate inventories rose last week. The US Energy Information Administration is set to release weekly inventory data at 10:30 a.m. (1430 GMT) on Wednesday.
Analysts’ perspectives on future oil price movementsDavid Morrison, Senior Market Analyst at Trade Nation, discussed the technical aspects influencing WTI prices. He observed,
On Monday, front-month WTI fell to its lowest level since mid-January. Since then, this low has held, and crude has managed a modest rally and consolidation. The hourly chart suggests a pick-up in upside momentum, and this will encourage those hoping that a bottom is in.
However, Morrison also pointed out potential resistance around $74, which could indicate either a further dip or a more sustained rally depending on market reactions.Overall, the fundamental outlook for oil prices remains influenced by concerns over weakening demand growth.Recent data from China indicated a significant fall in its trade balance, with daily crude oil imports dropping to their lowest levels in nearly two years.This, combined with signals of a slowdown in the US economy, contributes to the downward pressure on oil prices.More By This Author:Intel Stock Price Forecast: Don’t Buy When There’s Blood In The Street Warner Bros Stock Price Comeback Could Be Epic AUD/USD Analysis Amid Fed And RBA Divergence On Rates
