By Ken Afor
Oil prices in the Asian market found stability during early trade on Wednesday, following significant fluctuations earlier in the week.
Market participants carefully assessed the impact of concerns surrounding the U.S. economy and the potential disruptions in supply due to ongoing tensions in the Red Sea.
At 03:00 GMT, Brent crude experienced a marginal decline of 1 cent, equivalent to 0.01%, settling at $75.88 per barrel.
Conversely, U.S. West Texas Intermediate (WTI) crude futures witnessed a slight increase of 4 cents, or 0.06%, reaching $70.42 per barrel.
Earlier in the week, oil prices experienced an increase of approximately $2 due to the attacks on vessels in the Red Sea by Houthi rebels over the weekend and the reported arrival of an Iranian warship on Monday.
The potential escalation of this situation could result in the closure of vital waterways for oil transportation, leading to significant disruptions in trade flows.
However, the market experienced a decline in the preceding session as the initial enthusiasm regarding prompt and forceful U.S. interest rate reductions diminished in anticipation of the Federal Reserve minutes and employment data release.
“Energy markets were unable to escape the broader pressure seen on risk assets with equity markets also weaker. The weakness in oil comes despite a ratcheting up in tensions in the Middle East,” Reuters quoting ING analysts.
Anticipations of abundant availability in the initial six months of 2024 have restrained price surges prior to the scheduled gathering of OPEC+ Joint Ministerial Monitoring Committee (JMMC) in early February. The specific date remains undecided, as confirmed by three sources within the alliance.
“While the geopolitical situation is a concern for the oil market, a fairly comfortable oil balance over the first half of 2024 does help to ease some of these worries,” said ING analysts.
“Given the scale of cuts we are already seeing, it will be increasingly difficult for the group to cut more if needed over the course of 2024,” they said, pointing to the fact that recent cuts have been driven by voluntary reductions, rather than group-wide cuts.
According to a survey by Reuters experts anticipated a decline in crude stockpiles for the previous week, as well as an increase in distillate and gasoline stocks, ahead of weekly U.S. crude and product inventory reports.
However, the American Petroleum Institute (API) industry group is scheduled to release its data at 4:30 p.m. (2130 GMT) on Wednesday, while the Energy Information Administration (EIA), the statistical arm of the U.S. Department of Energy, will release its data at 11:00 a.m. (1600 GMT) on Thursday.
The release of the latter data has been delayed by a day due to the New Year’s holiday on Monday.
