Oil prices saw a modest recovery in Asian trading on Wednesday, supported by heightened tensions in the Middle East, though gains were restrained by ongoing weak demand.
Brent crude futures increased by 17 cents, or 0.16%, reaching $76.60 per barrel by 0615 GMT, while U.S. West Texas Intermediate (WTI) crude rose by 17 cents, or 0.23%, to $73.37.
The recovery in prices followed news that Hamas appointed Yahya Sinwar as the new Gaza leader, succeeding the assassinated Ismail Haniyeh. This move underscores the ongoing radical stance of Hamas following the October 7 attack on Israel.
Serena Huang, head of Asia oil analysis at Vortexa, noted that the uptick in oil prices might be driven by increased supply risks due to the escalating tensions in the Middle East and a rebound from recent lows. However, weak demand remains a significant factor, expected to limit further price increases.
Chinese trade data revealed a drop in July’s daily crude oil imports to their lowest level since September 2022, reinforcing bearish demand sentiment.
Earlier in the session, oil prices had declined due to U.S. data showing an unexpected increase in crude oil and gasoline inventories. According to the American Petroleum Institute (API), crude stocks rose by 176,000 barrels for the week ending August 2, contrary to analysts’ expectations of a 700,000-barrel drop. Gasoline inventories also increased by 3.313 million barrels, and distillate stocks grew by 1.217 million barrels.
The U.S. Energy Information Administration is expected to release its weekly inventory data later today.
The price recovery follows a significant drop earlier this week, with Brent futures hitting their lowest level since early January and WTI futures reaching their lowest since February. The declines were driven by concerns over a potential U.S. recession, which is affecting global oil consumption.
The Middle East tensions, including Iran’s threats of retaliation against Israel and the U.S., have heightened fears of disruptions to oil supplies. Additionally, lower production at Libya’s Sharara oilfield, which produces 300,000 barrels per day, is contributing to supply concerns.
The U.S. Energy Information Administration estimates that global oil inventories decreased by around 400,000 barrels per day in the first half of this year and projects a decline of about 800,000 barrels per day in the second half.
