Oil prices drift higher after bruising losses; M.East escalation in focus

Oil prices rose slightly in Asian trade on Wednesday, steadying after logging bruising losses over the past week as the prospect of a less severe escalation in the Middle East and weak demand weighed.

Prices plummeted more than 4% in the prior session after a media report said Israel will not attack Iran’s oil and nuclear facilities, quelling fears of a major escalation in the Middle East. 

Weak economic readings from China also weighed, as the country’s oil imports fell in September. Adding to anxiety over demand, two major oil industry organizations cut their demand outlook this week.

Brent oil futures expiring in December rose 0.4% to $74.55 a barrel, while West Texas Intermediate crude futures rose 0.4% to $70.31 a barrel by 21:12 ET (01:12 GMT).  M.East fears ease after Israel report 

Fears of a severe escalation in the Middle East conflict eased after a Washington Post report said Israeli Prime Minister Benjamin Netanyahu assured U.S. officials that the country would not attack Iran’s oil and nuclear sites. 

Markets were watching for Israel’s retaliation over an early-October missile strike by Iran, as hostilities between Israel and Iran-backed forces showed little signs of easing.

Fears of all-out war in the region had been a major boost to oil prices, as traders priced in a greater risk premium on the prospect of Middle East supply disruptions.  IEA, OPEC warnings dent oil outlook

Oil markets were also grappling with warnings on increased supply and lower demand from two major industry groups this week.

The International Energy Agency said in a monthly report on Tuesday that it expects oil markets to see a supply glut in 2025, and that it stood ready to plug any potential supply disruptions from the Middle East. 

The agency also slightly trimmed its 2024 demand growth forecast, citing weakness in top importer China.

The cut came just a day after the Organization of Petroleum Exporting Countries cut its demand growth forecast for 2024 and 2025, citing concerns over worsening demand in China.

China announced a slew of stimulus measures in recent weeks. But investors were still underwhelmed by a lack of details on the timing and scale of the planned measures. 

Weak economic readings from the country also dented sentiment.

Source: Investing.com