Oil Prices Steady Amid Gaza Ceasefire Talks

Uncertainty in Gaza

Oil prices remained relatively flat on Wednesday, following two consecutive days of losses. The ongoing deadlock in Gaza ceasefire negotiations raised concerns about the stability of Middle East oil supplies, counteracting a larger-than-anticipated increase in inventories.

Market Movements

Brent crude futures saw a slight increase to $89.49 per barrel at 0330 GMT, while U.S. West Texas Intermediate (WTI) crude futures rose by 8 cents to $85.31.

Geopolitical Tensions

Despite escalating tensions in the Middle East due to the prolonged conflict between Israel and Gaza, both benchmarks saw a 1.8% decrease from the previous week. There is growing concern that the conflict could draw in additional countries, potentially including Iran, a key OPEC member.

Market Analyst Insights

Market analyst Tony Sycamore from IG in Singapore noted, “The recent rally in crude oil prices has eased with hopes for a ceasefire in Gaza and higher U.S. inventories.”

Inventory Data and Concerns

The American Petroleum Institute reported a 3.03 million barrel increase in U.S. crude stocks last week, exceeding analysts’ expectations of a 2.4 million barrel rise. The official U.S. government inventory data is scheduled for release later in the day.

Future Uncertainties

Sycamore highlighted the potential for further price increases, citing various factors such as unexpected events like a cooler-than-expected U.S. CPI or geopolitical tensions involving countries like Ukraine, Russia, and Iran.

Industry Forecasts

The U.S. Energy Information Administration raised its projection for U.S. crude oil production to 13.21 million bpd by 2024. Additionally, the EIA anticipates Brent crude prices to average $88.55 a barrel in 2024, up from a previous estimate.

Continued Discussions

Tuesday saw a decline in both Brent and WTI prices as ceasefire negotiations between Israel and Hamas persisted in Cairo.

Regional Concerns

The potential closure of the Strait of Hormuz by Iran and trade restrictions between Turkey and Israel added further complexities to the already volatile situation.