Prices showed signs of stabilization in Asian markets today after a sharp decline triggered by the possibility of a ceasefire between Israel and Hezbollah. Futures saw a modest increase of 0.14% to $77.29 a barrel, while U.S. West Texas Intermediate futures edged up to $73.60 a barrel.
The previous market session saw a drop of more than 4% due to the possible ceasefire between Hezbollah and Israel, but concerns over an Israeli attack on Iranian oil facilities continue to cause caution among traders. Macquarie analysts noted that increased market volatility was expected as it faces bearish fundamentals and escalating tensions in the Middle East.
Tuesday’s decline followed a significant rally that began after Iran’s missile strikes on Israel on Oct. 1, which led to a weekly gain of 8% on Friday, marking the biggest increase in more than a year. However, Tuesday’s developments indicated a change in Hezbollah’s position, with the group’s deputy leader Naim Qassem expressing support for a ceasefire in Lebanon without the precondition of a truce in Gaza.
On the demand side, US crude oil inventories reportedly increased by nearly 11 million barrels last week, beating analysts’ expectations. This data comes from market sources citing figures from the American Petroleum Institute. Despite the increase in crude stocks, fuel stocks have declined.
Weak demand is reflected in the US Energy Information Administration’s (EIA) recent revision of the global oil demand growth forecast for 2024, lowering it by 20,000 barrels per day to 103.1 million from bpj. This revision is attributed to moderate industrial production and manufacturing growth in the United States and China.
Adding to market concerns, Hurricane Milton is expected to hit Florida’s Gulf Coast today, threatening gasoline supplies in one of the most fuel-consuming states in the United States. In anticipation of the hurricane’s arrival, Florida closed most of its ports, and energy companies halted operations on some pipelines and terminals in Tampa.
Market analyst Tony Sycamore of IG predicts that the oil market could settle into a new trading range between $72.50 and $77.50, given uncertainties over the impact of the hurricane on the oil infrastructure and Israel’s potential response to previous Iranian missile attacks.
Reuters contributed to this article.
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